Nvidia Down Nearly 4% in Premarket Trading as Justice Department Reportedly Launches Antitrust Investigation Over Antitrust Conspiracy Claims – Intel (NASDAQ:INTC), Advanced Micro Devices (NASDAQ:AMD)

Nvidia Corp. NVDA The company’s shares fell nearly 4% in premarket trading on Friday following reports that the U.S. Department of Justice has opened an antitrust investigation into allegations of monopolistic practices in the AI ​​chip market.

What happened:The Justice Department has opened an investigation into Nvidia over complaints from its competitors that it potentially abuses its dominant position in the AI ​​chip market, The Information reported on Thursday, citing people involved in the discussions.

The investigation is focused on determining whether Nvidia pressured cloud service providers to purchase multiple Nvidia products.

The investigation also examined whether Nvidia charged customers higher prices for networking equipment if they wanted to buy AI chips from competitors such as Advanced Micro Devices AMD AND Intel Corp. INTCNvidia currently has about 80% of the AI ​​chip market share.

“We compete by building on decades of investment and innovation, rigorously complying with all regulations, making NVIDIA solutions available in every cloud and on-premises for every enterprise, and ensuring customers can choose the solution that’s best for them,” an NVIDIA spokesperson told Reuters.

Progressive groups and senator Elizabeth Warren (D-Mass.) advocated for the DOJ to investigate Nvidia over competition concerns. The groups criticized Nvidia’s bundling of software and hardware, according to the report, a practice that French antitrust enforcers also flagged.

See also: Trump’s son-in-law-backed software giant QXO loses 80% in pre-market trading, valuation plummets from $90 billion to $8.6 billion

Why is this important?:The Justice Department’s investigation into Nvidia is part of a broader regulatory focus on the AI ​​sector. In June, it was reported that the U.S. Department of Justice and the Federal Trade Commission had finalized an agreement to ease potential antitrust investigations into the dominance of AI industry leaders, including Microsoft Corp. MSFT, OpenAIand Nvidia.

On Wednesday, the former speaker of the House of Representatives Nancy Pelosi (D-Calif.) revealed it has purchased additional shares of Nvidia while also selling part of its stake in Microsoft.

What’s more, Nvidia’s market value has skyrocketed, with predictions from prominent investors suggesting it could reach nearly $50 trillion within a decade. This optimistic outlook stems from Nvidia’s key role in the growing demand for AI chips, which are essential for training and running advanced generative AI models.

Despite U.S. export controls, Nvidia is expected to generate $12 billion in China this year by selling AI chips designed to meet those restrictions, underscoring Nvidia’s strategic maneuvering to maintain its global presence in the market.

Reduction: Nvidia shares closed at $109.21 on Thursday, down 6.67% on the day. The stock continued its downtrend in pre-market trading, losing another 3.53%. Despite this recent decline, Nvidia shares have seen significant growth this year, up 126.72%, according to Benzinga Pro data.

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This story was generated by Benzinga Neuro and edited by Kaustubh Bagalkote