Is DOJ Inquiry Into Nvidia A Sign the Chipmaker Has Peaked?

Has Nvidia peaked? That’s a question investors may be pondering today, after The New York Times report that the U.S. antitrust police have decided to open an inquiry into the chip maker. (It’s surely coincidental that the report came a day after Nvidia passed $3 trillion in market capitalization, making it the second most valuable company, above Apple and behind Microsoft, although it fell today just below Apple). It sometimes seems that by the time antitrust regulators have woken up to the power of a big tech firm, technology has evolved to the point where that firm’s dominance is already on the wane. The 1990s antitrust investigation into Microsoft, even as it was fumbling key new internet categories like search, is a classic example of that.

As for Nvidia, while it’s impossible to call the top at the moment, the threats to its dominance in AI chips are well documented. Not only is chip maker AMD on Nvidia’s heels, this week updating its AI offering, but the three major cloud services buying many of Nvidia’s chips—Microsoft, Amazon and Google—have or are developing their own versions of AI chips. Lots of startups, like Groq, are trying to compete with Nvidia, for what that’s worth. None of these alternatives may be at the level of Nvidia’s chips but over time you can imagine some of them at least will become good enough, thereby reducing demand for what Nvidia’s Jensen Huang has to offer. Indeed, as we reported here, some customers including OpenAI are already looking for ways to spend less on Nvidia hardware, particularly its networking cables.