NVIDIA (NASDAQ: NVDA) The company’s shares continued to face heavy selling pressure on Friday, down 4.5% as of 1:15 p.m. ET, according to data from S&P Global Market Intelligence.
NVIDIA shares are falling following disappointing employment figures released today by the U.S. Department of Labor, as well as recent news that the company is being investigated by the Department of Justice (DoJ) for antitrust violations.
Weak jobs report sends Nvidia stock plummeting
Starting in 2022, the Federal Reserve began an aggressive campaign of raising interest rates to combat runaway inflation. The U.S. central banker was aiming for a soft landing for the economy to avoid a recession while slowing the devaluation of the currency.
While the Federal Reserve is widely expected to finally cut interest rates later this month, investors have grown skeptical recently about the likelihood of a soft-landing scenario coming to fruition. The Labor Department’s employment report released today was the latest bad news on that front, with Nvidia and other growth stocks being hit especially hard.
Data showed that the U.S. added 142,000 jobs in August, falling short of Wall Street’s average target of 160,000 new jobs. The size of the shortfall is particularly notable because analysts and economists had begun to revise their targets downward in light of other economic indicators. For example, investors received news early last week that U.S. manufacturing production fell again last month. So even as a long-awaited pivot to interest rate cuts appears imminent, investors may not get the bullish macroeconomic environment they were hoping for.
Is Nvidia at risk of antitrust litigation?
Bloomberg reported on Tuesday that Nvidia had received a subpoena from the Department of Justice as part of an antitrust investigation. The outlet first reported on the probe in June, and reports of the subpoena raised concerns that the investigation was escalating, sparking a sell-off in the artificial intelligence leader’s shares.
NVIDIA responded publicly to the Bloomberg report yesterday, saying that no subpoena had been issued by the Department of Justice. This helped the stock recover, but it also brought the possibility of an impending antitrust lawsuit back into the spotlight. In an article published today, Business Insider detailed a letter from Senator Elizabeth Warren expressing support for an antitrust investigation into NVIDIA. Senator Warren expressed concern that the company has too much influence in the AI space, saying that the company’s market dominance poses “serious economic risks.”
The story continues
Nvidia’s advanced graphics processing units (GPUs) are the foundational hardware for AI training and other applications, and the company holds a commanding lead in that category. But while the company dominates the advanced GPU market, it’s not clear that the Department of Justice would be able to prevail if it decided to bring an antitrust lawsuit against the company.
For risk-tolerant investors who can live with volatility, the recent sell-off in Nvidia shares could present a worthwhile buying opportunity.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.
Why Nvidia shares are plummeting again today was first published by The Motley Fool.
