Nvidia Suffers Record $280 Billion Market Cap Loss Amid Antitrust Probe

In a historic market event, Nvidia, the world’s largest manufacturer of computer chips, experienced its most significant one-day loss in market capitalization on Tuesday, September 3, 2024. The tech giant saw its value plummet by over $280 billion following reports of an antitrust subpoena from the United States Department of Justice (DOJ).

Unprecedented Market Decline

Nvidia’s shares closed down 9.5% at $108, resulting in a staggering $278 billion reduction in market cap. This marks the largest single-day value wipeout for any stock in the history of the U.S. share market, according to Google Finance data. The downward trend continued in after-hours trading, with shares falling an additional 2% to a low of $105.

Antitrust Concerns

The sharp decline came in the wake of reports that the DOJ had issued subpoenas to Nvidia and several other companies as part of an investigation into potential antitrust law violations. This move represents an escalation from previous non-binding questionnaires, potentially signaling the government’s preparation for a formal complaint against the chipmaker.

Antitrust officials are reportedly concerned that Nvidia may be making it difficult for businesses to switch to other AI and computer chip providers. There are also allegations that the company has penalized buyers who don’t exclusively use its AI services.

Nvidia’s Response

In response to the investigation, Nvidia stated, “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.” CEO Jensen Huang defended the company’s practices, explaining that priority is given to customers who utilize Nvidia products in ready-to-go data centers to prevent stockpiling and accelerate technology installation.

Broader Market Impact

The news had a ripple effect across the tech sector, particularly affecting semiconductor stocks. The PHLX chip index plummeted 7.75%, its largest one-day drop since 2020. Other major players in the industry also saw significant losses:

• Intel dropped nearly 9%
• AMD fell 7.8%
• Broadcom lost about 6%
• Qualcomm declined nearly 7%

The VanEck Semiconductor ETF (SMH), which tracks semiconductor stocks, was down 7.5%, marking its worst day since March 2020.

AI Optimism Cooling

Nvidia’s decline is seen as a sign that investors are becoming more cautious about the emerging AI technology that has fueled much of this year’s stock market gains. The company’s meteoric rise, which saw its value increase by 118% year-to-date even after the recent drop, has been largely driven by its dominance in AI-specific infrastructure.

Looking Ahead

Despite the setback, Nvidia remains a formidable force in the tech industry. With a market cap of $2.65 trillion, it still dwarfs its competitors, being 30 times larger than former market leader Intel and 12 times larger than rival Advanced Micro Devices (AMD).

As the market digests this news and awaits further developments in the DOJ’s investigation, all eyes will be on Nvidia and the broader semiconductor sector to see how this unfolding situation impacts the future of AI and chip technology.