Nvidia’s Market Valuation Drops by $260 Billion After Subpoena from US DoJ

Nvidia has faced a significant setback as its market valuation plunged by $260 billion following a subpoena issued by the US Department of Justice (DoJ). The subpoena is part of a broader antitrust investigation into AI companies, sparking concerns over Nvidia’s market practices and future standing in the industry.

Subpoena issued amid antitrust probe

The US Department of Justice has served Nvidia with a subpoena, intensifying its ongoing antitrust investigation. The inquiry aims to scrutinize the business practices of AI companies, including Nvidia, amid allegations of market dominance abuse. Bloomberg reported that the DoJ had previously sent questionnaires to Nvidia as part of the probe, signaling the seriousness of the investigation. 

A subpoena is a legal document requiring the recipient to provide testimony or produce documents pertinent to an ongoing investigation. Nvidia and other AI companies are under heightened regulatory scrutiny as these investigations gain momentum. An Nvidia spokesperson stated, “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.”

Impact on Nvidia’s market cap

The subpoena triggered a massive sell-off in Nvidia’s shares, leading to a $260 billion drop in market capitalization. This marks the largest single-day loss in Nvidia’s history, raising questions about the company’s prospects in an increasingly regulated environment. The drop is especially significant given Nvidia’s recent struggles, including its disappointing quarterly results, which had already caused a decline in investor confidence.

The Department of Justice’s investigation into Nvidia comes amid broader concerns over the company’s potential monopolistic practices. Several AI chipmakers and tech competitors have accused Nvidia of leveraging its market position to stifle competition, an allegation that has drawn the attention of regulators in multiple countries.

Global regulatory pressure on Nvidia

The DoJ’s actions are part of a growing global effort to regulate AI companies and ensure fair competition. Regulators in the United States and South Korea, the European Union, the United Kingdom, and China have reportedly contacted Nvidia. These inquiries reflect a coordinated international effort to address concerns over Nvidia’s market influence.

The broader tech market has also faced turbulence. The “Magnificent 7” stocks, which include Nvidia, have collectively lost $550 billion in market value in just one day. This significant downturn highlights the fragility of the tech sector in the face of regulatory pressures and market corrections.

Nvidia’s recent forecast for Q2 had already dampened investor sentiment, as the company failed to meet expectations. The combination of regulatory scrutiny and disappointing financial results has created a challenging environment for Nvidia, which now faces the daunting task of restoring investor confidence while navigating complex legal challenges.

As the investigation continues, the DoJ has not yet provided any public comments on the subpoena issued to Nvidia. The unfolding situation underscores the high stakes for Nvidia and the broader AI industry as regulatory bodies ramp up their efforts to ensure competitive fairness in rapidly evolving markets.

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