The US Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News has reported, citing people familiar with the investigation.
The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas.
Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said.
"Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," a spokesperson for the company said.
Last month, the Information reported the Department of Justice had launched an investigation into the company after complaints from competitors that it had abused its market dominance.
The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it.
The company said last week it has received requests for information from regulators in the US and South Korea, regarding its investments, partnerships and agreements with other companies. It has also received inquiries from the EU, UK and China.
Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI.
The company's shares fell 1.5% in extended trading last night after losing 9.5% in the regular session, slashing Nvidia's market capitalisation by $279 billion, a record one-day loss for any company.
The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations.
Meanwhile, Intel dropped nearly 9% after Reuters reported CEO Pat Gelsinger and key executives are expected to present a plan to the company's board of directors to slice off unnecessary businesses and revamp capital spending at the struggling chipmaker.
Worries about slow payoffs from hefty AI investments have dogged Wall Street's most valuable companies in recent weeks, with shares of Microsoft and Alphabet trading lower following their quarterly reports in July.
"Some recent research has questioned if the revenues from AI alone will eventually justify this wave of capital spending on it. When assessing AI capex by individual companies, investors must consider if they are making the best use of their balance sheets and capital," BlackRock strategists wrote in a client note.
Nvidia's record one-session loss in stock market value was greater than the $232 billion decline suffered by Facebook-owner Meta Platforms on February 3, 2022, when the social media company issued a dismal forecast, according to LSEG data.
Following Nvidia's quarterly report last week, the mean analyst estimate for annual net income to January 2025 has climbed to $70.35 billion from about $68 billion ahead of last week's report.
Those increased earnings estimates, combined with Nvidia's share losses, have the chipmaker now trading at 34 times expected earnings, down from over 40 in June and in line with its two-year average.
Broadcom, another chipmaker that has benefited from the boom in AI computing, fell 6.2% ahead of its quarterly report due later this week.
