Nvidia's stock plummeted by 9.5% on Tuesday, wiping out $278.9 billion in market value (approximately 1.99 trillion yuan), and fell more than 2% further after hours. This follows reports that Nvidia has received a subpoena from the U.S. Department of Justice as part of an antitrust investigation.

Media sources, citing individuals familiar with the investigation, have revealed that the Department of Justice has distributed questionnaires to numerous companies and is now issuing legally binding requests for information from these companies. This suggests that the Department of Justice is one step closer to formally filing a lawsuit against Nvidia.

Insiders have indicated that antitrust officials are concerned that Nvidia is making it more difficult for customers to switch to other suppliers and is putting buyers who do not fully utilize its AI chips at a disadvantage.

Regulators are inquiring whether Nvidia offers preferential pricing and supply channels to customers who exclusively use its products.

Additionally, the Department of Justice is investigating Nvidia's acquisition of the software startup Run:ai.

Since Nvidia released its earnings report last week, its stock has fallen by 14% over three trading days.

Advertisement

Apart from Nvidia, semiconductor stocks experienced a collective decline on Tuesday. Intel fell by 8.8%, GlobalFoundries by 8.57%, Micron Technology by 7.96%, Advanced Micro Devices (AMD) by 7.82%, Qualcomm by 6.88%, TSMC by 6.57%, ASML by 6.47%, and Broadcom by 6.14%.

The Philadelphia Semiconductor Index, which tracks chip stocks, fell by nearly 7.8%, marking the largest drop since the "Black Monday" on August 5th a month ago, and the second-largest decline this year. All 30 component stocks of the index fell by no less than 5.4%. Among them, ON Semiconductor, KLA Corp., and Monolithic Power Systems Inc. saw declines exceeding 9%. The chip stock ETF, Semiconductor Index ETF-VanEck (SMH.US), closed down by 7.5%, the largest drop since March 2020.

Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset Management, warned that unless companies outside the tech sector begin to increase their demand for AI services, spending on AI will be hard to justify. Jean Boivin, head of the BlackRock Investment Institute, believes that "patience is required" before AI takes off, a process that will take "years, not quarters."