Nvidia's market value plummets by $279 Billion amid Department of Justice antitrust probe

In a noteworthy turn of events, Nvidia's stock price has plummeted, wiping out nearly $279 billion from its market capitalization.

This sharp decline follows a report from Bloomberg indicating that the Department of Justice (DOJ) has issued a subpoena to Nvidia as part of an ongoing antitrust investigation.
The Department of Justice’s (DOJ's) inquiry centers on allegations that Nvidia may be creating barriers for customers who wish to transition to alternative AI chip suppliers. This probe has not yet progressed to a formal accusation, but it has already sent shockwaves through the tech industry. Nvidia's dominance in the artificial intelligence (AI) chip market, particularly in data centers, is a key focus of the investigation. The company commands an impressive 80 per cent market share in this sector, a position it has maintained for several years.
Nvidia's success in the AI chip market can be traced back to its early adoption and innovation in this field. Nearly a decade ago, Nvidia introduced Compute Unified Device Architecture (CUDA), a programming language that has become indispensable for engineers developing advanced AI models, including those powering technologies like ChatGPT. This strategic move allowed Nvidia to secure a strong foothold in the market well before competitors like AMD and Intel began to invest heavily in AI chip technology.

This development resulted in an intense impact on the market and Nvidia’s client base. Nvidia's client list includes some of the biggest names in the tech industry, such as Microsoft, Alphabet, Amazon, and Tesla. The surge in demand for its AI chips has driven significant growth for the company. In addition to its hardware offerings, Nvidia has also expanded into enterprise software subscription services and networking products, which are designed to enhance the performance of its chips. The latest iterations of Nvidia's chips are often pre-installed in specially designed server racks, reflecting the company's strategy to evolve from a component supplier to an integrated systems provider.
Stock reaction and future implications for Nvidia

The news of the Department of Justice (DOJ) subpoena has had an immediate impact on Nvidia's stock price. During regular trading hours, the shares dropped nearly 10 per cent, and the decline continued in after-hours trading, with the stock sliding an additional 2 per cent. This dramatic fall underlines the market's sensitivity to regulatory scrutiny and the potential implications for Nvidia's business model.

A representative for Nvidia stated in a conversation with CNBC that the company "wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them."

As the investigation unfolds, it remains to be seen how this will affect Nvidia's market position and its relationships with key clients. The antitrust probe could potentially lead to changes in how Nvidia operates, particularly if the Department of Justice (DOJ) finds evidence of anti-competitive practices. For now, the tech giant faces a period of uncertainty, and investors are closely watching the developments.

How much is a loss of $279 billion to Nvidia’s market cap, what investors in India should know?

To give a fair estimation of the loss in the market capitalisation of Nvidia investors should know several key facts about the company. Currently Nvidia is a 2.649 trillion-dollar enterprise i.e., 2649 billion US dollars in market capitalisation. Now the company has fallen to this market capitalization post a 10 to 11 per cent correction in its stock price thus losing $279 billion in a single trading session.

In a straight comparison the total market capitalization of India’s biggest listed company Reliance Industries is $244.46 billion US dollars according to the companies market cap website.

Further, currently Reliance Industries is the 45th most valuable company in the world. Therefore, it is interesting to note that Nvidia has suffered a bigger loss than the entire market capitalisation of Reliance Industries in a single trading session.