Nvidia is hit by a subpoena by the US Department of Justice (DoJ) amid antitrust investigations in various countries. The news comes after Nvidia’s market valuation suffered after disappointing quarterly results.
The company’s stock has plummeted by at least $260 billion in a single day to mark the largest one-day drop.
DoJ issues subpoena to Nvidia
The US Department of Justice (DOJ) has issued a subpoena to Nvidia amid its antitrust investigation into AI companies. According to a report by Bloomberg, sources say the DOJ earlier sent out questionnaires to Nvidia as part of its probe. Several AI companies have reportedly received similar subpoenas.
A subpoena is a legal order that asks an entity to provide testimony or documents as part of an investigation. Any failure to comply often results in legal penalties.
“Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them,” said an Nvidia spokesperson.
Market cap of ‘Magnificent 7’ drops
Reports indicate that since August, the DoJ has been probing Nvidia for abusing its market dominance. This came after AI chipmakers and some tech competitors accused Nvidia of attempting to monopolize the market. Meanwhile, AI companies are dealing with the double whammy of technological slowdown and regulatory tightening.
Recently, Meta Platforms said that it will reveal how it is using the personal data of Brazilians to train generative artificial intelligence (AI). The statement came after the country’s data protection authority demanded the information.
Meanwhile, Reuters reported last week that Nvidia received information requests from US and South Korean regulators regarding its operations after receiving inquiries from agencies in the EU, UK, and China. On the sidelines of the latest report, Nvidia’s market value took a hit of at least $260 billion in one day.
$NVDA Fell more than 10 $MSTR Market Caps in one day.
That’s how small $MSTR is relative to mega cap tech. https://t.co/jApY0d5bj9
— Ryan (@ryQuant) September 4, 2024
The drop marks a record one-day fall in Nvidia’s market cap. Meanwhile, social media conversation is speculating if trades were placed before the news that a subpoena was served became public. NVDA’s price initially dropped without any major news, leading to speculations that well-connected insiders had access to this information.
Nvidia’s Q2 forecast had also hit its market after the chipmaker missed investor expectations. Meanwhile, the broader optimism in the tech market is subdued with the “Magnificent 7” stocks cumulatively losing $550 billion in one day. The DoJ has not made any public comments on the reports at press time.