After the news about the antitrust investigation, the “green” IT giant lost 10% of its market value. Investors are concerned that the U.S. Department of Justice is already collecting witness testimony. This means that a lawsuit against the vendor is not far off. We tell you what practices NVIDIA is suspected of and what is happening inside the company.
Market dominance
In recent years, the brand’s shares have skyrocketed, making NVIDIA one of the most valuable corporations in the world. This is because it has become a leader in sales of equipment for the AI industry. Chips for neural networks are in high demand from Microsoft, Google, OpenAI, and more. However, at the end of the recent close of trading, the manufacturer was valued at $2.648 trillion, which is 14% less than three sessions earlier. And the last loss – $278.9 billion – was called the largest drop in the value of shares in the history of the exchange.
Local authorities suggested that the company could achieve such a key role in this area by unscrupulous means. According to anonymous sources, NVIDIA pressured its customers to buy exclusively its products and not move to other suppliers. For example, the purchase of AI computing software developer RunAI made it difficult to interact with other hardware manufacturers. The vendor’s position could also be strengthened by lucrative contracts with those who exclusively purchase NVIDIA systems.
The official investigation into violations of antimonopoly acts is still ongoing. At the same time, representatives of the tech giant deny all accusations, explaining the situation by the competitive advantages of its products. “NVIDIA wins due to the actual merits of our chips, which can be seen from the benchmarks. Customers themselves choose the most suitable solutions for them,” the brand said in a statement.
The price of success
Contradictory sentiments are growing not only outside, but also inside the IT giant. The other day, employees of the corporation shared their impressions of what it is like to work at NVIDIA. As a result of the 3,776 percent rise in stock prices over the past five years, many professionals have become multimillionaires. But the working conditions make it almost impossible to enjoy wealth: there are complaints about too long shifts and high levels of stress.
The company’s CEO and founder, Jensen Huang, has strict requirements for staff, often involving overtime. The manager openly stated that instead of layoffs, he preferred to “torture employees until they reach perfection.” However, by this he meant that they should learn from their mistakes. Nevertheless, a former member of the technical support team for enterprises said that he was prescribed a 7-day work week, and the schedule was often extended to two in the morning.
“I observed a similar situation in the engineering department. Some corporate meetings turned into fights with shouts. But it was difficult to quit, refusing such a high pay,” he said anonymously. The strategy for retaining employees with the brand is effective – the right to receive dividends from shares is granted four years after taking office. Such “golden handcuffs”, that is, a future large salary, motivate many to stay in the company and tolerate not the most pleasant conditions.
Nvidia’s stock has become a bellwether for the global economy as a whole, as it has helped drive a boom in investment from large tech companies that have looked to AI to drive new innovation — and profit.
On Wednesday, its share price declined another 1.7%. Its overall market capitalization — the value of the company based on its shares — remains around $2.6 trillion.
“The surge in NVIDIA’s earnings comes from the massive investment in AI being done by the other big tech companies,” Dario Perkins, managing director at TS Lombard financial group.
