Nvidia’s market cap plummets by $279 billion in a single day amid DOJ antitrust probes

Nvidia experienced a staggering $279 billion loss in market value on Tuesday, marking the largest single-day decline in U.S. history. This sharp drop came as Wall Street and investors reevaluated their enthusiasm for AI amid broader market concerns and tepid economic data.

The chip giant’s stock plummeted 9.5%, reflecting growing investor caution around the AI sector, which has driven much of this year’s stock market gains.

The drop comes as the U.S. Department of Justice escalates its antitrust investigation into the chip giant. Nvidia’s shares selloff intensified after news broke that the U.S. Justice Department issued subpoenas to Nvidia and other companies as part of an antitrust investigation.

“Nvidia shares, which suffered a record-setting $279 billion rout on Tuesday, fell further in late trading after Bloomberg reported on the subpoenas. Still, the stock has more than doubled this year — fueled by explosive sales growth at the Santa Clara, California-based chipmaker,” Bloomberg reported.

The DOJ is looking into whether Nvidia’s practices have violated antitrust laws, particularly focusing on concerns that the company may be limiting competition by making it difficult for customers to switch suppliers or by penalizing those who don’t exclusively use its AI chips. This escalation from previous questionnaires to legally binding subpoenas signals that the government may be preparing for a formal complaint.

Is the AI Hype a Bubble? Investors Caution About AI Investments

Nvidia’s recent market cap loss reflects growing investor caution surrounding AI technology. But Nvidia is not alone. Earlier this year, there were reports that OpenAI, the maker of the popular ChatGPT, was bleeding money and the company faces a potential $5 billion loss this year and may run out of cash in 12 months.

Nvidia’s struggles are mirrored across the semiconductor sector, with the PHLX chip index dropping 7.75%—its largest one-day decline since 2020. The broader market selloff was further fueled by Nvidia’s recent quarterly forecast, which fell short of the high expectations set by its meteoric stock rally this year.

Adding to the industry’s woes, Intel saw its stock tumble nearly 9% following reports that CEO Pat Gelsinger is expected to present a cost-cutting plan to the board. The struggles of these tech giants highlight the mounting concerns on Wall Street about the long-term returns on massive AI investments.