DOJ Inquiry into Nvidia: Stock Remains Strong, Says BofA

The U.S. Department of Justice has initiated an inquiry into Nvidia, focusing on potential antitrust violations related to the company's AI chip sales. Reports indicate that the DOJ is investigating whether Nvidia has made it difficult for customers to switch to other chip vendors and if it has penalized those who do not exclusively use its products. This inquiry reportedly began in June, with subpoenas sent to Nvidia as part of the investigation process. Despite the ongoing inquiry, Bank of America analysts have expressed confidence in Nvidia's stock performance, maintaining a buy rating and considering it a top pick in the tech sector. They noted that Nvidia's stock price has risen significantly this year, although it experienced a 12% decline over the past five days. Analysts believe that the inquiry is unlikely to have a material impact on Nvidia's fundamental business opportunities. Bank of America highlighted several factors supporting Nvidia's market position, including the availability of alternative vendors for customers, the superior performance of Nvidia's products compared to competitors, and the continued strong demand for AI chips. The analysts emphasized that Nvidia's cloud customers are adept at sourcing chips from multiple suppliers, which mitigates concerns about the company's market dominance. The situation reflects a broader trend in the tech industry, where several major companies, including Apple and Alphabet, are also facing antitrust investigations. Despite these challenges, stocks for these companies have remained resilient, indicating that the market may not be overly concerned about the implications of these inquiries at this time.