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After abhorrent weakness in NVIDIA shares for much of yesterday’s trading session, which culminated in another selloff when Bloomberg reported that the GPU maker had been summoned by the US Department of Justice (DOJ), the company decided to ignore its reluctance to comment on the matter, stating that it did not receive the subpoena in question.
$NVDA Nvidia says we have not been subpoenaed by the Justice Department photo.twitter.com/m1bG7Rs7S0
— Benzinga (@Benzinga) September 4, 2024
Namely, NVIDIA has formally stated that it has “not been subpoenaed” by the DOJ. In its comments to various publications, the company noted:
“We have consulted with the US Department of Justice and have not been subpoenaed. However, we are happy to answer any questions regulators may have about our business.”
Well, if that’s an accurate portrayal of the situation, why didn’t NVIDIA publicly address it last night or early this morning? After all, the GPU maker lost more than $280 billion in market capitalization on Tuesday, with most of those losses attributed to a select group of investors who were presumably in the know, according to the prevailing rumor mill.
Here’s my 7 and a half minutes talking about $NVDA and the @TheDepartmentOfJustice. Some points:
1/ It’s not illegal to maintain a monopoly, it’s illegal to use that power to harm consumers. NVIDIA, which holds over 90% of the datacenter GPU share in the most important AI sector, is raising red flags. I’m… https://t.co/ZsqTNJYAQF— Patrick Moorhead (@PatrickMoorhead) September 4, 2024
Of course, other industry commentators remain adamant that NVIDIA’s outsized losses on Tuesday were simply a function of the deteriorating economy. According to Patrick Moorhead, CEO of Moor Insights, institutional investors “don’t care until there’s a decision.”
Frankly speaking, NVIDIA’s lethargy in responding to the subpoena-related controversy has raised more questions than it has answered. Is it simply that the company has yet to physically receive a subpoena and that one could still materialize? We’ll likely learn a lot more about this saga in the coming days.
As we noted yesterday, DOJ investigators are reportedly looking into NVIDIA’s alleged practice of giving preferential treatment in terms of pricing and/or supply to customers who use its AI chips exclusively or deploy the company’s full systems, as reported by Bloomberg. Note that Huang has previously stated that NVIDIA prioritizes customers who deploy its products within its designated turnkey data centers, presumably in an attempt to prevent stockpiling.
The DOJ is also reportedly investigating NVIDIA’s acquisition of AI computing software maker RunAI. According to DOJ officials, this acquisition could make it harder for customers to abandon NVIDIA’s offerings.
NVIDIA is trying to become a one-stop shop for everything AI, which includes not only dedicated AI accelerators (chips) but also software-based solutions for training AI models, as well as data center design optimization services, which aligns with the GPU maker CEO Jensen Huang’s “AI factory” vision.