Shares of graphics processor leader Nvidia have suffered a sharp decline, losing more than 8% in a single day, marking the biggest one-day loss in market capitalization in the company's history, as the U.S. Justice Department launches an antitrust investigation.
What is the essence of the investigation?
The US Department of Justice suspects Nvidia of monopolizing the market for graphics processors used for gaming, cryptocurrency mining, and artificial intelligence. In particular, the investigation focuses on Nvidia's merger with Arm, a British company that develops processor architecture for mobile devices.
What does this mean for Nvidia?
Antitrust investigation could have serious implications for Nvidia:
Fines: If the investigation confirms violations, Nvidia could be fined a significant amount.
Splitting the company: Authorities may require Nvidia to split the business to increase competition in the market.
Arm deal blocked: Arm merger could be blocked, cutting off Nvidia's access to important technologies.
Market reaction
Investors reacted to news of the investigation with panic, causing Nvidia shares to plummet. The company's market capitalization was wiped out by more than $20 billion in a single day.
What's next?
The outcome of the antitrust investigation is still unpredictable. Nvidia claims that its actions do not violate the law, and the company intends to cooperate with the authorities. However, if the investigation confirms violations, Nvidia could face serious problems.