Nvidia (NASDAQ:NVDA) stock is down more than 3% today after the U.S. officially launched an investigation into the company following complaints from competitors that it abused its position within the artificial intelligence (AI) chip market, of which it currently controls about 80%.
The U.S. Department of Justice (DOJ) is also investigating accusations that Nvidia charges its customers a steeper price for networking equipment if they plan on purchasing semiconductors from rival chipmakers Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC).
“We compete based on decades of investment and innovation, scrupulously adhering to all laws, making Nvidia openly available in every cloud and on-prem for every enterprise, and ensuring that customers can choose whatever solution is best for them,” a Nvidia representative told Reuters.
A number of progressive groups, as well as Massachusetts Sen. Elizabeth Warren, have repeatedly called on the DOJ to investigate Nvidia on antitrust concerns. Specifically, they want the DOJ to look into Nvidia’s “bundling of software and hardware,” an activity that has interestingly also drawn the ire of French antitrust regulators.
NVDA Stock Continues to Slide Amid Apparent Correction
Nvidia is in the midst of a cold front of late after a red-hot first half of the year. Indeed, NVDA stock is down more than 13% over just the past month, along with other chipmakers.
Investors are speculating that today’s drop is mostly unrelated to the antitrust probe, however, as tech stocks are slipping in general following the release of the weaker-than-expected July jobs report. Unemployment reached its highest level in three years in July, sending the Nasdaq officially into correction territory, down more than 10% from its recent peak.
Nvidia stock may also be responding to Intel’s disappointing earnings call on Thursday. The fellow chipmaker missed both revenue and profit estimates, while announcing a $10 billion cost-cutting plan and a 15% workforce cut.
Still, NVDA is up 120% so far this year as one of the big winners of 2024’s AI craze. Whether it holds onto those gains heading into the final stretch of the year remains to be seen.
On the date of publication, Shrey Dua held LONG positions in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
