The U.S. Justice Department’s antitrust division has launched an early-stage investigation into Nvidia, the leading manufacturer of artificial intelligence (AI) chips, over concerns about its market dominance. This move comes as Nvidia’s rapid growth in the AI sector has attracted global antitrust scrutiny from the European Union, the U.K., China, and South Korea.
The Justice Department’s antitrust division has contacted Nvidia to inquire about its contracts and partnerships, according to The Wall Street Journal. While no subpoenas have been issued yet, the department might issue one in the coming months if further investigation is deemed necessary.
In addition to the Justice Department’s probe, the Federal Trade Commission (FTC) is also examining investments by major tech companies like Microsoft, Amazon, and Alphabet in AI startups, seeking to determine if any competitive advantages were gained through these investments. This proactive approach from both the Justice Department and FTC stands in contrast to their previous hands-off stance regarding tech giants like Google and Meta Platforms.
Nvidia maintains that its market position is a result of its chips’ superior performance and emphasizes that customers have the freedom to choose the solutions best suited for them. However, concerns have been raised about Nvidia’s reliance on a small number of customers for its revenue. Nearly half of its $30 billion second-quarter revenue came from just four customers, a situation deemed “highly unusual” by analysts.
Despite these challenges, Nvidia remains a sector favorite, with analysts maintaining a positive outlook on its future tied to large language models and gaming. The company’s stock has seen a 14% decline amid broader market concerns, but portfolio managers remain optimistic about its long-term prospects, predicting significant revenue and stock growth.
This investigation into Nvidia comes at a critical time for the company, adding another layer of scrutiny to its already prominent position in the AI market. The outcome of these investigations could significantly impact Nvidia’s future trajectory and the broader AI landscape.
