AI chip giant NVIDIA’s market value broke through the $3 trillion mark for the first time on Wednesday. However, after news of NVIDIA founder Huang Renxun planning to sell part of his shares and the US launching an antitrust investigation against NVIDIA emerged, NVIDIA’s stock price plummeted nearly 6% on Thursday, closing down 1.14% and falling below the $3 trillion market value, allowing Apple to reclaim the position of the second largest company by market value.
Background:
NVIDIA introduced the AI game assistant Project G-Assist, a large-scale LLM for players to ask for strategies and equipment.
AI chip giant NVIDIA’s stock price has surged nearly 150% so far this year, rising 5.16% on Wednesday to bring its market value to $3.011 trillion, making it the third member of the $3 trillion club in US stock market history. NVIDIA also surpassed Apple to become the world’s second largest company by market value.
However, NVIDIA’s stock price plummeted nearly 6% on Thursday, closing down 1.14% at $1210.45 per share, bringing its market value back to $2.98 trillion, once again surpassed by Apple.
The drop in NVIDIA’s stock price on Thursday may be related to two main reasons. According to the latest regulatory filings submitted by NVIDIA to the SEC, Huang Renxun has formulated a trading plan based on Rule 10b5-1 of the US Securities Exchange Act, planning to sell up to 600,000 shares of NVIDIA holdings by March 31, 2025, with a total value of $735 million based on NVIDIA’s 5-day closing price of $1,224.40.
Rule 10b5-1 of the US Securities Exchange Act allows senior executives of listed companies to establish predetermined trading plans, setting conditions such as trading volume, stock price, etc., to be automatically executed when the conditions are met, to prevent insiders from potentially engaging in insider trading using undisclosed material information.
The last time Huang Renxun sold NVIDIA shares was on September 14th of last year when he bought 29,684 shares of NVIDIA stock through call options at a price of $4 per share, totaling $118,736, and then sold the same number of shares at an average price of $455.75 per share, cashing out a total of $13.5 million.
NVIDIA facing antitrust investigation
In addition, according to sources cited by The New York Times today, the US Department of Justice and the Federal Trade Commission (FTC) have reached an agreement to launch an antitrust investigation into the dominant positions of Microsoft, OpenAI, and NVIDIA in the AI industry.
Under the agreement, the US Department of Justice will lead the investigation into whether NVIDIA has violated antitrust laws, while the FTC will investigate the practices of ChatGPT developer OpenAI and Microsoft. Microsoft has invested $13 billion in OpenAI, with a stake of up to 49%, and has made deals with other AI companies.
Sources say that in the past, NVIDIA, Microsoft, and OpenAI have largely avoided the regulatory scrutiny impact of the Biden administration. However, as generative AI that can produce human-like text, images, videos, and audio ignites an industry boom, this situation is starting to change.
Two sources said that the industry is becoming increasingly concerned about NVIDIA’s dominant position, including how the company’s software limits customers to only use its chips, and how the company allocates these chips to customers.
If NVIDIA’s stock price continues to fall as a result, weakening the AI theme, it will inevitably have a ripple effect on the US stock market, and may also affect the cryptocurrency market, leading to a short-term decline.