Nvidia’s Stock Slides As EU Ramps Up Anti-Trust Investigation Into AI Chip Maker: Retail Turns Bearish

Nvidia’s shares tumbled nearly 2% in morning trade on Friday after reports of European anti-trust regulators ramping up their investigation into the company’s alleged monopolistic practices.

Mizuho Securities estimates that Nvidia controls between 70% and 95% of the market for AI chips used for training and deploying models like OpenAI’s GPT.

While AMD and Intel have made efforts to challenge Nvidia’s market share, the company still maintains a significant lead.

According to Reuters, the European Commission is sending out questionnaires to the company’s rivals and customers to determine if the AI chip maker bundles its products in a way that may give it an unfair advantage.

The report, citing sources, alleges that the authorities are trying to determine how Nvidia sells its GPU products to various customers and whether the contracts require them to buy networking equipment with GPU.

"We support customer choice and compete on merit across the board. Our products are best-in-class and able to stand on their own. We support open industry standards, enabling our partners and customers to use our products in a wide variety of configurations and system designs," Nvidia responded to the report.

Such questionnaires are typically part of the watchdog's fact-finding process, with the potential to amplify initial concerns. EU antitrust violations can result in fines of up to 10% of a company’s global annual revenue.

Nvidia Sentiment and Message Volume on Dec 6 as of 12:00 p.m. ET | Source: Stocktwits

Retail sentiment around Nvidia turned ‘bearish’ (42/100) from ‘neutral’ a day ago, but chatter didn’t see much momentum, with most users on Stocktwits anticipating the stock to climb back up next week.

The drop in Nvidia’s stock follows a relatively flat performance on Thursday amid speculation that it may start producing its Blackwell AI chips in Arizona.

Nvidia’s Blackwell semiconductor, its most advanced model to date, has traditionally been manufactured by Taiwan Semiconductor Corp. (TSMC) in Taiwan. However, a Reuters report on Thursday revealed that Nvidia is in talks to shift production to TSMC’s new plant in Arizona, which could kick off early next year. 

However, neither company has commented on the speculation at the time of writing.

Retail bullishness is also reflected in a recent Stocktwits poll, which revealed that Nvidia’s is the top choice for retail investors among the Magnificent 7 if they ever had to gift shares to a family member. 

Stocktwits Poll on MAG7 Stock on Dec 6 as of 12:15 p.m. ET | Source: Stocktwits

Nvidia’s stock has gained over 197% this year so far, outperforming the broader markets by a large margin.

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