Nvidia Stocks Surge 3.54% Amid Broader Gains Despite Legal and Production Hurdles

Nvidia's stock price surged by 3.54% on Monday amid broader gains in the semiconductor sector, with its stock up over 2.4%. This rise comes despite the company's cautious margin projections for the remaining two quarters of this year and 2025. According to sources, Nvidia is taking strategic steps to ensure better future development, despite the challenges posed by Rev 0 Blackwell production issues and uncertainties in next year's chip market. It's believed that the pressure on Nvidia's profit margins is moderate and bearish expectations have been overstated.

Recently, Nvidia has found itself in murky waters as one of the world's most valuable companies. On Tuesday, September 3rd, the company's stock plummeted 9.5%, resulting in a market value decline of $279 billion. Concurrently, the U.S. Department of Justice (DOJ) has reportedly issued a subpoena to Nvidia as part of an antitrust investigation. Investigators are gathering information from other tech firms, with the DOJ's San Francisco office spearheading the inquiry.

The investigation reportedly centers on Nvidia's announced acquisition of Israeli firm Run AI back in April. Run AI provides software that helps enterprise clients manage and optimize computational infrastructure, integrating various AI tools and frameworks. Concerns have been raised that this deal may make it harder for customers to switch away from Nvidia's chips, and regulators are questioning whether Nvidia has offered preferential pricing to customers who purchase its full systems.

Adding to the complexity, Nvidia has been expanding its CUDA software ecosystem, which allows developers to use C language to write code for CUDA architecture. Market participants suggest that CUDA's platform is central to accessing Nvidia’s computational power.

Legal experts are weighing in on Nvidia's situation. According to Beijing-based attorney Zhou Zhaofeng, the DOJ is scrutinizing whether Nvidia's practices could be considered a violation of antitrust laws, particularly noting its dominant market position. Zhou notes that such investigations can be prolonged, potentially taking years to resolve, and if Nvidia is found guilty, hefty fines could ensue.

Meanwhile, Nvidia has refuted claims that it has received a DOJ subpoena, emphasizing that it has not been served. The company maintains that its market success is a result of the superior value and standards of service it offers and that customers are always free to choose the solutions that best suit their needs.

The impact of Nvidia’s latest Blackwell AI chip design flaw further compounds its challenges. Reports indicate that these chips, crucial for entities like Meta, Google, and Microsoft, are experiencing production delays, potentially hindering AI training progress and data center construction timelines. The chips are now expected to ship en masse only by the first quarter of next year.

This delay stems from a critical circuitry issue affecting the production quality at partner manufacturer TSMC (Taiwan Semiconductor Manufacturing Company). Consequently, Nvidia aims to extend the shipment of its Hopper series chips to mitigate production shortfalls for Blackwell chips.

Despite facing design challenges with Blackwell and market scrutiny, Nvidia's strategic maneuvers to maintain market dominance underscore its adaptive resilience. The coming months will reveal whether these strategies can offset the technical and legal hurdles the tech giant currently navigates.