Nvidia, $NVDA, has received a DOJ subpoena in an escalating antitrust investigation.
Antitrust authorities are concerned that Nvidia is making it more difficult for customers to switch to other suppliers and may be penalizing buyers who do not exclusively use its artificial intelligence chips, according to sources who requested anonymity due to the private nature of the discussions.
Nvidia's stock, which had already taken a significant hit on Tuesday, continued to decline after Bloomberg reported on the subpoenas. However, the stock has still more than doubled this year, driven by skyrocketing sales at the Santa Clara, California-based chipmaker.
As part of the ongoing investigation, which Bloomberg first revealed in June, officials have reached out to other tech companies to gather information. The Department of Justice’s San Francisco office is leading the probe, according to the sources. A DOJ representative declined to comment.
When asked about the investigation, Nvidia responded by stating that its market leadership is a result of the superior quality of its products, which offer faster performance.
“Nvidia wins on merit, as demonstrated by our benchmark results and the value we provide to customers, who are free to choose the solution that best meets their needs,” the company said in an emailed statement.
Nvidia has faced increased regulatory scrutiny since becoming the world’s most valuable chipmaker and a major beneficiary of the boom in AI spending. The company's sales have more than doubled each quarter, surpassing previous industry leaders like Intel Corp.
As part of the DOJ’s inquiry, regulators are examining Nvidia’s acquisition of RunAI, a deal announced in April. RunAI specializes in software that manages AI computing, and there are concerns that the merger could make it harder for customers to move away from Nvidia’s chips. Additionally, regulators are looking into whether Nvidia offers preferential pricing and supply terms to customers who exclusively use its technology or purchase its complete systems, the sources said.
Founded in 1993, Nvidia initially gained fame for selling graphics cards to video gamers. However, its chipmaking approach turned out to be highly effective for training AI models, a process that involves feeding large amounts of data into the software. The company has since expanded its offerings to include software, servers, networking, and services, which it claims are designed to accelerate AI deployment.
