Nvidia denies antitrust subpoena from Justice Department

Officials are concerned about firm's AI chip dominance

Nvidia has denied reports that it received a subpoena from the US Department of Justice (DOJ) over antitrust concerns.

The company's statement comes in response to a Bloomberg report on Tuesday, which sent Nvidia's stock plummeting in after-hours trading.

"We have inquired with the U.S. Department of Justice and have not been subpoenaed," an Nvidia representative told CNBC.

"Nonetheless, we are happy to answer any questions regulators may have about our business."

While Nvidia has denied a formal subpoena, Bloomberg has claimed the company received a "civil investigative demand," often referred to as a subpoena, from the DOJ's San Francisco office.

It said the demand sought information about Nvidia's business and its acquisition of AI management firm RunAI.

Citing individuals familiar with the matter, Bloomberg said antitrust officials are concerned that Nvidia's dominance in the market for AI chips, estimated to be between 70% and 95%, may be hindering competition. They believe the company may be making it more difficult for buyers to switch to other chip suppliers, and penalising those who do not exclusively purchase Nvidia's products.

According to Bloomberg, the DOJ's investigation has a particular focus on acquisition of RunAI, a company that makes software for managing AI computing. Regulators fear the deal could further consolidate Nvidia's market power and make it more difficult for competitors to gain a foothold.

They are also allegedly investigating whether Nvidia gives preferential treatment to customers who exclusively use its technology or buy its complete systems.

Nvidia, on the other hand, attributes its success to its product performance and value proposition.

"Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them," Nvidia told CNBC.

The company also highlighted its rapid expansion in the AI market, offering a range of products and services to speed AI deployments.

Nvidia's stock has been under pressure in recent weeks. The company suffered a blow on Tuesday, with its stock plunging by 2.5% in after-hours trading, following a 9.5% drop during regular trading.

The dramatic sell-off wiped out a massive $279 billion in market value, marking the largest single-day drop for a US company.

Nvidia's earnings report last week failed to meet investors' expectations, and the reports of antitrust investigation added to the downward pressure on the stock.

The sell-off in Nvidia's stock was not isolated. Intel shares dropped nearly 9% after reports of planned cost-cutting measures, while Broadcom's stock fell by 6.2% ahead of its quarterly report.

At present, the broader tech sector has been experiencing a downturn, with Microsoft and Alphabet trading at reduced levels following their July reports.

August was a difficult month for tech stocks as investors reassessed their expectations for the sector, particularly in the context of the AI boom.