Nvidia (NASDAQ: NVDA) shares are being hit by another day of heavy selling on Friday. The company’s stock was down 4.5% as of 1:15 p.m. ET, according to data from S&P Global Market Intelligence.
Nvidia shares are losing ground amid a disappointing jobs report released today by the U.S. Department of Labor. Recent news of an antitrust investigation into the company by the Department of Justice (DoJ) is also playing a role in the decline.
Disappointing employment figures drag down Nvidia’s stock price
From 2022, the Federal Reserve began an aggressive campaign of interest rate hikes to combat soaring inflation. The US central banking authority had tried to achieve a soft landing for the economy that would slow the devaluation of the currency and at the same time prevent a recession.
While it’s widely expected that the Fed will finally cut rates later this month, investors have recently become more skeptical about the likelihood of a soft landing scenario. Today’s Labor Department jobs report provided the latest bad news on that front, with Nvidia and other growth stocks taking a particularly hard hit.
The U.S. added 142,000 jobs in August, according to the data, falling short of Wall Street’s average target of 160,000 new jobs. The size of the miss is particularly notable because analysts and economists had already begun to revise their targets downward in light of other economic indicators. For example, investors were treated to news earlier in the week that U.S. manufacturing output had fallen again last month. So while the long-awaited turn toward rate cuts now appears imminent, investors may not be getting the optimistic macro backdrop they had been hoping for.
Is Nvidia at Risk of an Antitrust Lawsuit?
On Tuesday, Bloomberg published a report saying that Nvidia had received a subpoena from the Justice Department as part of an antitrust investigation. The outlet first reported on the probe in June, and the subpoena report raised concerns that the investigation was escalating and leading to a selloff in the artificial intelligence (AI) leader’s stock.
Nvidia publicly responded to Bloomberg’s report yesterday, stating that it had not been subpoenaed by the DoJ, which helped send the stock soaring, but has put the possibility of a looming antitrust lawsuit back in the spotlight. In a report released today, Company Insider detailed a letter written by Senator Elizabeth Warren expressing support for an antitrust investigation into Nvidia. Warren raised concerns that the company had become too influential in the AI space, saying its dominant market position posed “serious economic risks.”
Nvidia’s high-end graphics processing units (GPUs) have become the foundational hardware for AI training and other applications, and the company enjoys a dominant position in the product category. But while the company dominates the high-end GPU market, it’s unclear whether the DoJ would prevail in an antitrust case against the company even if it decided to take such action.
For risk-tolerant investors willing to embrace volatility, Nvidia’s recent share price declines could present an interesting buying opportunity.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Why Nvidia Shares Are Crashing Again Today was originally published by The Motley Fool
