Technology
Wednesday, September 4th, 2024 2:14 pm EDT
Key Points
- Nvidia’s shares fell slightly by 1% on Wednesday following news that the company received a subpoena from the U.S. Department of Justice as part of an antitrust investigation into its AI chip market dominance.
- The investigation is in its early stages, with the DOJ probing whether Nvidia’s significant market share (over 80% in data center AI chips) makes it difficult for customers to switch to other suppliers. Nvidia’s dominance is tied to its early investment in AI technology, particularly its CUDA programming language.
- Nvidia has expanded beyond chip production, offering enterprise software subscriptions and networking products to optimize chip performance. The company has also shifted towards providing complete systems, with its chips pre-installed in Nvidia-designed server racks.
Nvidia shares experienced a slight decline of 1% on Wednesday morning following a Bloomberg report that the company received a subpoena from the U.S. Department of Justice (DOJ) as part of an ongoing antitrust investigation. This drop came after a significant 10% fall on Tuesday, which wiped $279 billion off Nvidia’s market capitalization, with further declines observed in post-market trading.
The DOJ’s probe is currently in its early stages, with no formal complaint filed yet. The investigation is focused on whether Nvidia’s dominance in the AI chip market makes it difficult for customers to switch to other suppliers. Nvidia holds over 80% of the market share for data center AI chips, a position it has secured through its early and significant investment in AI technology, particularly with the development of its CUDA programming language nearly a decade ago. This language has become essential for engineers training advanced AI models, contributing to Nvidia’s strong market presence.
Nvidia’s rapid growth in recent years has been closely linked to its leadership in AI chips, especially for data centers, outpacing competitors like AMD and Intel. The company’s top customers include major cloud service providers and tech giants such as Microsoft, Alphabet, Meta, Amazon, and Tesla. As demand for AI chips surged, Nvidia expanded its offerings to include enterprise software subscriptions and networking products designed to optimize the performance of its chips. The company has also moved towards providing entire systems, with some of its latest chips being available pre-installed in Nvidia-designed server racks.
In response to the DOJ inquiry, a Nvidia representative emphasized that the company “wins on merit,” citing strong benchmark results and the value it provides to customers, who have the freedom to choose the best solutions for their needs. The DOJ has declined to comment on the investigation.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/03/nvidia-slides-in-post-market-trading-after-drop-wiped-out-300-billion.html
