Nvidia loses $279bn in a day! DOJ antitrust probe sends shockwaves through the market

Nvidia, the leading AI chipmaker, is facing a steep decline in its market capitalization, now valued at approximately $2.02 trillion. This comes as the United States Department of Justice (DOJ) intensifies an antitrust investigation into Nvidia’s business practices, which has raised serious concerns among investors. The DOJ’s probe focuses on allegations that Nvidia penalizes customers who do not exclusively use its chips and that its acquisition of RunAI further limits market competition. These concerns have led to a massive sell-off, with Nvidia experiencing a record one-day loss of $279 billion in market value.

DOJ Investigation Sparks Market Turmoil

The DOJ’s legally binding subpoenas mark a significant escalation in the investigation, moving closer to a potential formal complaint. Nvidia’s stock price dropped significantly after the news, with a 9.5% decline to $108 per share, continuing to fall by another 2% in after-hours trading. This single-day loss of $279 billion is the largest ever for any stock in U.S. history, highlighting investor fears about the potential outcomes, such as substantial fines or operational restrictions for Nvidia.

Global and Competitive Pressures

Nvidia is not only facing scrutiny in the U.S.; regulators in the European Union and France are also examining its market practices. The outcome of these investigations could lead to significant changes in Nvidia’s operations and its market strategy. As Nvidia navigates these challenges, it must also contend with intensifying competition from Advanced Micro Devices, Intel, and new entrants like Cerebras Systems, which are innovating in the AI chip space and reducing dependence on Nvidia’s technology.

Economic and Geopolitical Risks Add to Challenges

The antitrust probe comes amid broader economic concerns that are impacting Nvidia’s stock. Weak U.S. manufacturing data and fears of a recession have driven down major indexes like the S&P 500, Dow Jones, and Nasdaq. Additionally, geopolitical risks, such as potential conflict in Taiwan, where Nvidia relies on Taiwan Semiconductor Manufacturing Company (TSMC) for chip production, add to the uncertainty.

The Road Ahead: Navigating Legal and Market Risks

The DOJ investigation’s outcome will be critical for Nvidia’s future. If the company is found to have engaged in anti-competitive practices, it could face substantial penalties and be forced to alter its business strategies. Conversely, successfully defending its practices could help Nvidia maintain its leadership in the AI chip market despite the increasing regulatory scrutiny and competition.