NVIDIA under pressure: capitalization falling by $278 billion and antitrust investigation | OpenAI Playground | OpenAI Chat | ChatGPT login | Turtles AI

NVIDIA suffered a heavy setback with the loss of $278 billion in market capitalization, signaling a black day for the semiconductor company. The company’s stock dropped 10 percent, prompting investors to investigate the underlying causes of the sharp decline.

Key points:

•  NVIDIA loses $278 billion in market capitalization in a single day.
•  The DOJ launches an antitrust investigation against NVIDIA, raising further concerns among investors.
•  Concerns focus on the company’s falling profit margins and sales practices.
•  DOJ investigation also on the acquisition of RunAI, a possible constraint on customers.

Among the factors discussed, many pointed to the recent release of the ISM manufacturing survey, which showed an increase in inventories after disruptions caused by the pandemic. In addition, concerns persist regarding NVIDIA’s profit margins, which have been put under pressure by increased production of Blackwell chips and the commercialization of the former Hopper series. The company had already predicted a decline in gross profit margin for the current quarter, estimating 74.4 percent compared to 76.7 percent in the previous quarter.

However, the hardest blow came when Bloomberg revealed that the U.S. Department of Justice (DOJ) formally sued NVIDIA as part of an ongoing antitrust investigation. This news has put the company, already under scrutiny for its attempt to consolidate a dominant position in the AI industry, in further trouble. DOJ investigators are looking into NVIDIA’s sales practices, focusing in particular on alleged preferential treatment given to customers who exclusively adopt its AI chips or integrated systems. This strategy, according to some, is intended to discourage stockpiling, instead prioritizing customers who use NVIDIA’s data centers.

In parallel, the DOJ is delving into NVIDIA’s acquisition of RunAI, a company specializing in AI processing software. According to authorities, this move could limit customers’ freedom to move away from NVIDIA’s proposed solutions, further tying them to the company’s ecosystem. For its part, NVIDIA has rejected the allegations, arguing that its success is based on merit and that customers are free to choose the products that best meet their needs.

This situation is part of a larger context, where the Justice Department has recently been working with the Federal Trade Commission (FTC) to share the burden of antitrust investigations among several technology companies. While the FTC is focusing on Microsoft and OpenAI, the DOJ has chosen to focus exclusively on NVIDIA, closely following the company’s moves in its attempt to become the undisputed leader in the field of AI.

The ongoing investigation and market pressures put NVIDIA under a critical lens, leaving investors waiting for further developments.