The U.S. Department of Justice (DOJ) is investigating if Nvidia (NVDA) is engaging in unfair trade practices to sell more of its advanced AI (artificial intelligence) chips to customers. According to a report by The Information, the DOJ received several complaints from rivals that accused Nvidia of abusing its market dominance in selling AI-powered chips. The DOJ is said to have sought feedback from competitors such as AMD (AMD) to get more clarity on the matter.
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The news comes a day after chip stocks, led by Nvidia, saw a strong rally in share prices, following Microsoft’s (MSFT) planned increase in AI investments. For reference, Nvidia holds a nearly 80% share of the AI chip market. The company’s shares have skyrocketed over 120% so far in 2024.
Here’s More About the Complaints on NVDA
According to the complaints, Nvidia “threatens” customers buying chips from other semiconductor companies. Moreover, the DOJ is probing if Nvidia overcharges customers for networking gear if they buy chips from rivals. Another concern among rivals is Nvidia’s race to acquire AI start-ups to choke potential competition and strengthen its position.
A report by Politico yesterday noted that the DOJ is investigating Nvidia for its acquisition of Israel-based AI start-up Run:ai. Earlier on Thursday, reports also mentioned that U.S. progressive groups and Democratic Senator Elizabeth Warren urged the DOJ to investigate Nvidia for its anti-competitive practices.
Commenting on the probe, a spokesperson for Nvidia said that the company strictly adheres to all laws, and competes fairly based on its own innovation and technology. Furthermore, the spokesperson noted that Nvidia makes its offerings openly available on the cloud and on-premise, allowing enterprises to select what’s best for them. It’s a wait-and-watch story for now, with the DOJ and the U.S. Federal Trade Commission (FTC) determined to have enhanced oversight of critical AI players.
Retail Investors Load Up Nvidia
TipRanks Stock Investors tool shows that currently, Nvidia has a Positive Investor Confidence Signal, as the number of portfolios holding NVDA stock increased by 2% in the last 30 days.
Is Nvidia a Buy or Sell?
Indeed, NVDA stock commands a Strong Buy consensus rating backed by 37 Buys and four Hold ratings on TipRanks. The average Nvidia price target of $142.74 implies 30.7% upside potential from current levels.
