Shares in AI chip designer Nvidia have been falling overnight following reports that US authorities are stepping up an investigation into whether the company has violated competition laws.
The company’s shares fell 2.4% in after-hours trading, supplementing a fall of nearly 10% in regular trading, sending its market capitalisation down by $279bn (£212bn) to $2.6trn, the biggest one-day fall ever for a US company.
Bloomberg reported that overnight, the Department of Justice sent subpoenas to Nvidia and other tech companies, taking steps to legally compel recipients to hand over information.
Nvidia executives are said to be concerned that the company is making it difficult for customers to switch to other semiconductor suppliers and penalizing buyers that refuse to give them exclusive use of Nvidia’s AI chips.
The moves mark an intensification of the U.S. antitrust investigation and bring the government one step closer to filing formal charges against Nvidia.
Tuesday’s sell-off came amid a market-wide sell-off sparked by weak U.S. manufacturing data that raised broader concerns among investors about the outlook for the U.S. economy. Manufacturing contracted at a moderate pace in August, with new orders, production and employment levels declining, according to the Institute for Supply Management’s monthly survey of factories.
That sent the S&P 500 down more than 2%, while the tech-heavy Nasdaq Composite Index fell nearly 3.3%. Uncertainty spread to Asia, where Japan’s Nikkei fell 4.2% on Wednesday and Australia’s S&P/ASX 200 index fell 1.9%.
This has exacerbated recent volatile trading for Nvidia and other AI-related stocks, including Google, Apple and Amazon, as investors worry that the real impact — and tangible benefits — of the much-touted AI revolution may still be a long way off.
Founded in 1993, Nvidia primarily designed chips for video games, but during the cryptocurrency boom it realized its processing technology could be used to mine digital coins. Since then, the company has shifted its focus to artificial intelligence, riding a new wave of excitement about the potential of large-scale language models.
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The company last week reported a 122% increase in second-quarter revenue, but signs of slowing growth, especially around its next-generation AI chip, code-named “Blackwell,” have spooked investors.
An Nvidia spokesman said: “We win on merit, as reflected in our benchmark results and value to customers, so they can choose the solution that’s best for them.”
Source: www.theguardian.com
