Nvidia hit with DOJ subpoenas

The most interesting thing in tech: A big day at Nvidia! There was a huge drop in market capitalization and a letter from the DOJ about an anti-trust investigation. But the most interesting thing to me was data from the earnings call showing that the usage of Nvidia's high-end chips for inference has stayed at 40%, suggesting again that AI is important, promising and growing—but that it's a long way still from actually transforming the economy in any way.

Nvidia had a rough day yesterday. The stock dropped 9.5%, wiping out $279 billion in market cap. That's the largest single-day drop in history. To put that in perspective: Nvidia lost more in value in a single day than McDonald's or PepsiCo are worth in total. Only 27 companies in the world are worth as much as Nvidia *lost* in a few hours. Why? Well, a mix of reasons. The company’s earnings outlook wasn't all that exciting, but what really spooked investors was the news that the Department of Justice is investigating Nvidia over antitrust concerns. They worry that Nvidia might be making it too hard for customers to switch suppliers and punishing those who don’t stick exclusively to its AI chips. This summer, NVIDIA briefly knocked Apple and Microsoft off the podium to become the most valuable company in the world. Fast forward to today: Nvidia’s market cap has slipped back to $2.7 trillion, putting it behind Apple ($3.3 trillion) and Microsoft ($3 trillion). But still, a $279 billion drop? That’s more than 99% of the companies on Earth are even worth. Nvidia now holds the crown for the biggest one-day stock price drop, surpassing Meta's infamous $240 billion loss back in February 2022 when Facebook announced declining daily active users for the first time ever.?This volatility isn’t just shocking, it’s a reminder of how ridiculously big Big Tech has gotten. It's a world where a $279 billion drop is just another Tuesday!

Nvidia just saw $279 billion wiped out in a single day — the biggest one-day drop ever for a US stock. Shareholders of the AI giant are no stranger to volatility, as it has routinely seen multi-billion dollar swings in market cap over the last year. In the last week, the stock is down about 15%. Now, though, the Department of Justice is reportedly investigating Nvidia for potential antitrust issues. Bloomberg reported that Nvidia may be under scrutiny for unfair competitive practices, as far as allowing its customers to switch to other sellers. Expect the stock market's wildest, most interesting stock too see more volatility in the coming weeks??

The US Department of Justice is ramping up its Nvidia investigation. Companies have received subpoenas as the US seeks evidence that the chipmaker violated antitrust laws, but Nvidia says it hasn't been subpoenaed: https://lnkd.in/gunvdJRe Regardless, Nvidia's stock dropped 9.5% on Tuesday, losing $279 billion in market value, the biggest single day drop on the stock market for a US company. Investors softened their optimism about AI, despite Nvidia's solid earnings report last week: https://lnkd.in/d4iZKsa5 Some people are complaining that the US government is at war with Nvidia and other tech companies, penalizing innovation instead of celebrating it. That's a misguided line of thinking. How many of those critics are Nvidia shareholders? ;) Antitrust officials are reportedly concerned that Nvidia is making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its AI chips. Groq CEO Jonathan Ross told me something similar earlier this year. He and others naturally have plenty of reason to get the US government on their side. Still, it's the government's job to figure out if the claims are accurate or bogus. In a capitalist system, the government should enable more competition, not less.

#Nvidia's market cap fell $279 billion today, the largest single-day decline for any company in history. That's bigger than the market cap of 474 companies in the S&P 500. $NVDA Source: Charlie Bilello

When your company's earnings is said to influence global capital markets, a detailed examination is perhaps warranted. Especially when one of their largest customers is being spotlighted for accounting "irregularities".

Nvidia's market cap fell $279 billion yesterday, the largest single-day decline for any company in history. That's bigger than the market cap of 474 companies in the S&P 500. Now, why is this news important? The yield curve officially corrected it's longest ever inversion and moved back to zero yesterday. Historically, ever correction in inversion has preceeded recession. Will this time be different or have stocks like Nvidia have started to sense fear? Credence Family Office

?? ???? ?????? ?????? ?????????????????? ???????????? ?????? ?????? ??????????????? The U.S. Department of Justice (DOJ) issued subpoenas to NVIDIA, escalating an antitrust investigation. Why? The question is whether NVIDIA’s practices are stifling competition in the AI chip market. (And possibly the broader chip market.) Allegations suggest that NVIDIA might be penalizing customers who don’t exclusively use its AI processors, making it difficult for them to switch to other suppliers. NVIDIA’s leadership in AI hardware has been driven by the global AI boom (and prior to that, the crypto boom). These phenomenon have skyrocketed NVIDIA's market position. (Even with the drops in stock price today, the company’s stock is up 118% year-to-date—no small feat.) The company emphasizes that its market dominance is due to the quality and performance of its products, which offer superior value to customers, not unfair practices. I think that the DOJ might be making an example out of a company that’s riding high on its success to show that they're "doing their job". The investigation could have implications for the entire industry as regulators worldwide focus more on competitive dynamics in tech. AI just happens to be the topic of the day. The DOJ’s scrutiny raises questions. But there’s no clear evidence yet that NVIDIA has engaged in anti-competitive behavior. Vendor lock-in is... a good business practice. But there's a distinct line when a company is being actively, aggressively anti-competitive. Unclear if NVIDIA is in that category. This investigation could be more about curbing a runaway success and the government making moves against tech companies than addressing actual violations. #AI #NVIDIA #linkedinnews #Semiconductors https://lnkd.in/eJMa_3Bi

Lots of understandable interest in NVIDIA's loss of around $300bn in market cap in one day, as investors headed to the exits in a stampede following some poor economic data. If you've worked in corporate communications and investor relations for a long time, you've seen days like this before. Not with a $300bn loss, certainly. But certainly double digit drops in value - maybe prompted by poor earnings data, or something happening with one of your competitors. Usually these events are accompanied by a fair amount of shouting from the corner offices, and a desperation to understand how this could have been avoided. The reality is that it couldn't be avoided, and that more importantly, it isn't a reflection of the underlying value of your business. Corp comms and IR people - like those in the C-suite - have to have a long-term focus on overall shareholder value. We shouldn't be overreacting to short-term dips because they're usually not indicative of the fundamental worth of the enterprise. We shouldn't be overreacting to short-term bumps either, because in reality the business is no more successful than it was the day before, either. A number of times now, I've talked CEOs off the cliff who've wanted to reach out to all employees in the aftermath of a major stock price drop to somehow 'explain' it. We shouldn't be encouraging teams to look at the stock price every day, and if we talk about precipitous drops, we're doing exactly that. Now of course, if today marks the start of a long-term shift in the way semiconductor businesses are valued, then that's a different matter. But that's a concern for another time, not something that needs to be considered after a single bad day at the office. #investorrelations #corporatecommunications

This is likely an unfounded case at best. The NVIDIA chip shortage (based on supply and demand,) caused them to prioritize larger standing clients - like every business always does. This will whither on the vine and any issues NVIDIAs business has moving forward just a function of increasing quality competition.