Nvidia shares have seen their biggest one-day drop in history amid an investigation by the US Department of Justice into antitrust violations.
Authorities have issued subpoenas to Nvidia and other companies to investigate the chip maker, Bloomberg writes.
According to the agency, the Justice Department previously sent questionnaires to companies, and is now sending legal requests obliging recipients to provide information. Thus, the government is taking the next step towards starting a formal investigation.
Bloomberg notes that antitrust authorities are concerned about Nvidia's actions to prevent partners from switching to other suppliers and punishing customers who do not exclusively use the company's chips.
The company's shares fell by 9.53% during the trading session on Tuesday even before the publication of information about the investigation, its capitalization decreased by $ 279 billion. After the release of information about the investigation, the price of Nvidia fell by another 2.41% in the post-market.
Shares of other chip makers also fell:
Intel — by 8%;
Marvell — by 8.2%;
Broadcom — by 6%;
AMD — by 7.8%;
Qualcomm — by 7%.
The VanEck Semiconductor ETF (SMH), which tracks the semiconductor industry, fell by 7.5%. This is the worst day since March 2020.
Shares of Asian semiconductor and equipment makers such as SK Hynix, Taiwan Semiconductor Manufacturing and Advantest also fell.
In June, Nvidia became the most valuable company in the world for the first time with a market cap of about $3.34 trillion. The company is now valued at $2.65 trillion. The company's chips are in high demand amid the AI boom. For example, in early September, Elon Musk announced the creation of a cluster for training artificial intelligence Colossus using 100,000 H100 graphics processors.
Nvidia has an estimated 80% market share in AI chips. Its revenue has grown by more than 200% for three consecutive quarters. The growth rate has slowed recently.
In response to questions about the investigation, Nvidia said its dominance in the chip market is due to the quality of its products, which provide higher performance.
As part of the investigation, the Justice Department is looking into the purchase of AI software maker RunAI, which the chip maker made in April. The regulator is also investigating whether Nvidia provides preferential prices to buyers who use its technology exclusively.
Recall that in early August, the hedge fund Elliott Management said that Nvidia was “in a bubble” and that the AI technology that determines the company's share price was “overvalued.”