NVIDIA has seen its share price plummet following a report of intensified scrutiny from US authorities over potential breaches of competition law.
During the regular trading session on Tuesday, NVIDIA’s share price experienced a near-10% drop. The fall wiped £212 billion from its market value, marking the largest single-day loss for a US company in history.
While the wider market experienced a sell-off fueled by concerns over weak US manufacturing data, NVIDIA was hit particularly hard after Bloomberg reported that the US Department of Justice issued subpoenas to NVIDIA and other tech firms.
Officials are reportedly concerned that NVIDIA’s business practices may be hindering client flexibility in switching to alternative semiconductor suppliers. Additionally, there are concerns about potential penalties imposed on buyers who opt not to exclusively utilise NVIDIA’s AI chips. Such actions would represent an escalation of the ongoing US antitrust investigation, bringing the government a step closer to formally charging NVIDIA.
In response, NVIDIA asserted its belief that its success is based “on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.”
This latest downturn adds to the recent volatility experienced by NVIDIA and other AI- stocks, such as Google, Apple, and Amazon. Investors are grappling with uncertainty surrounding the timeline for tangible benefits and concrete returns from the much-touted AI revolution.
Analysts suggest that investors are seeking greater clarity on the trajectory of gross margins as production of NVIDIA’s new Blackwell chip increases. Furthermore, they are eager for more concrete evidence that AI is delivering tangible returns for customers.
After a 9.5% decline on Tuesday alone and a 14% drop since last week’s earnings report, NVIDIA’s stock has shown marginal signs of recovery in today’s trading session, registering a modest 0.64% increase at the time of writing.
Looking ahead, NVIDIA will need to convince investors of its growth potential not only for 2025 but also for 2026. While Wall Street currently focuses on Blackwell chip shipments, there is increasing interest in the company’s next-generation chip offering.
(Photo by Sebastian Molina)
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By AI News, September 4, 2024.
