Nvidia says it didn’t get a DOJ subpoena, while regulators look into its AI-chip dominance
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Playing DOJ-ball… On Tuesday Bloomberg reported that the US Justice Department had sent subpoenas to Nvidia (and other companies) in an escalation of an antitrust probe into whether the AI chip leader violated competition laws to stay dominant. Yesterday, though, Nvidia said it had not received a subpoena from the DOJ, but that it had been in contact with the agency. Nvidia stock plunged on Tuesday after the initial subpoena report, wiping out nearly $280B in market value — the biggest-ever daily market-cap decline for a US company.
Subpoena or not: Regulators are said to be looking into complaints that Nvidia makes it difficult to switch to competitors and that it punishes customers who don’t use its AI chips exclusively.
Chip outta luck?… Nvidia shares haven’t been faring well since the company reported earnings last week. Its quarterly growth was feverish as the AI spree raged, but it wasn’t quite as strong as usual (tough comparisons). Another issue for Nvidia: growing competition. Rivals like AMD, Intel, and even its biggest customers (like Google and Amazon) are cookin’ up their own AI chips.
Lonely at the top: Companies are desperate for alternatives to Nvidia’s pricey processors to help them keep up in the AI race. Still…
Like “Super Mario” in the ’90s, Nvidia’s the biggest game in town. It’s estimated to control between 70 and 95% of the AI-chip market ($30B in sales last quarter alone).
Winners draw attention… and it ain’t always good. Nvidia’s explosive success has attracted investors (the stock has more than 2x’d in the past year). But it’s also started to attract attention from regulators, who are reportedly asking questions about its acquisitions and biz practices. Nvidia joined the exclusive $2T club in March, and now it may be attracting the type of scrutiny that’s been focused on other trillion-dollar techies (like Apple, Microsoft, and Google).