Shares in the AI chip designer Nvidia have continued to slide overnight after a report said US authorities were ramping up an investigation into whether the company had breached competition laws.
The company’s shares fell 2.4% in after-hours trading, exacerbating a near-10% drop in the regular trading session that slashed its value by $279bn (£212bn) to $2.6tn, marking the largest one-day drop in history for a US company.
Overnight, the US Department of Justice sent subpoenas to Nvidia and other tech companies, in a move that will force recipients to provide information under law, Bloomberg reported.
Officials are said to be concerned the company has made it harder for clients to switch to other semiconductor suppliers and is penalising buyers that refuse to exclusively use Nvidia’s AI chips.
Such a move would signal an escalation of the US antitrust investigation, and brings the government a step closer to launching a formal complaint against Nvidia.
The sell-off on Tuesday came amid a wider sell-off on markets sparked by weak US manufacturing data that raised broader concerns about the outlook for the country’s economy among investors. The Institute for Supply Management’s monthly factory survey showed that manufacturing contracted at a moderate pace in August, with new orders, production output and employment levels falling.
It sent the S&P 500 index down more than 2%, while the tech-focused Nasdaq Composite shed almost 3.3%. Fears spread to Asia, where Japan’s Nikkei 225 index fell by 4.2% on Wednesday and Australia’s S&P/ASX 200 index dropped 1.9%.
It compounded a recent bout of volatile trading in Nvidia and other AI-related stocks, including Google, Apple and Amazon, with investors worried it could take much longer to see the practical impact – and solid returns – from the much-hyped AI revolution.
Nvidia was founded in 1993, having primarily designed chips for video games, before spotting an opportunity during the cryptocurrency boom where its processing technologies could be used for mining digital coins. It has since shifted its focus to artificial intelligence, riding a fresh wave of excitement over the potential of large language models.
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While it reported a 122% rise in second-quarter revenues last week, investors were spooked by signs of a slowdown in growth, in particular around its next-generation AI chips, codenamed Blackwell.
A Nvidia spokesperson said: “Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them.”
