Nvidia shares suffered their biggest one-day decline ever amid a sell-off in artificial intelligence (AI) stocks. The company is also facing an antitrust investigation
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The US company shares, Nvidiabest known for producing processors for theartificial intelligenceposted their worst single-day decline, falling more than 9% on Tuesday, as investors continued to retreat from AI stocks.
The company’s share price fell another 2% in extended trading, with a total loss of nearly $300 billion (€272 billion) in market capitalization. This followed news that the company received a subpoena from the United States Department of Justice (DOJ) for an antitrust investigation.
Concerns about antitrust violations
According to a Bloomberg report, Published after the close of U.S. markets on Tuesday, the U.S. Department of Justice (DOJ) issued subpoenas to Nvidia and other companies, seeking possible antitrust violations.
DOJ officials fear that the dominant position in the global AI chip market You leave customers with limited options, making it difficult to switch to other market players if they don’t use Nvidia products exclusively.
The investigation marks an escalation of an antitrust probe that began in June, when the United States launched an investigation into both Microsoft and Nvidia.
Tech giants, including Nvidia, have been the main beneficiaries of the AI boom since 2023, following Microsoft’s launch of the ChatGPT chatbot in February last year. Nvidia is the leading supplier of AI chips, particularly graphics processing units (GPUs), which are essential for hyperscalers that support the training of Large Language Models (LLMs).
The best performance remains that of Nvidia
Despite the recent decline, Nvidia shares are up 146% this yearresulting in the best performance among global technology stocks.
However, the company reported disappointing quarterly earnings last week, signaling that Nvidia’s explosive growth period, which began in the second quarter of fiscal 2024, may be slowing down. That sent its stock down 7% on the day.
Tuesday’s sell-off suggests investors continue to dump AI stocks amid signs of economic deterioration, mirroring a broader trend in global markets.
Risk-off sentiment prevails in global markets
The Nvidia-led market plunge has also been attributed to worsening sentiment about the broader macroeconomic environment.
Risk aversion dominated global market movements on Tuesday, with major European benchmarks that closed in the redwhile US indices collapsed at the beginning of the month.
The pan-European Stoxx 600 index fell 1%, the S&P 500 fell 2% and the Nasdaq, a technology index, fell more than 3%. The decline was particularly pronounced in semiconductor stocks, with Nvidia’s slump reverberating across global markets, while European chipmaker ASML fell more than 4%.
US economic data disappoints
Tuesday morning, the United States reported disappointing economic data, revealing that the manufacturing activities have contracted for the fourth straight month in August, reigniting recession fears in the world’s largest economy.
Wall Street recorded its worst one-day sell-off since early August, amid global turmoil led by the Bank of Japan’s rate hike and growing economic concerns.
Investors appear to be increasingly sensitive to economic indicators following the declines in early August, as The Federal Reserve (Fed) is expected to begin cutting interest rates this month.
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A deeper cut could signal a rapid deterioration in economic conditions. Historically, an economic recession has always occurred during a Fed rate-cutting cycle.
Most other major central banks have already started cutting rates amid slowing economic growth and declining inflation.
Even the European Central Bank is expected to make an interest rate decision later this month, with market participants expecting the bank to make its second 25 basis point cut of the year.
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