Nvidia stock tumbles on news of China investigation: Is the AI chip giant in trouble?

In a move that underscores growing geopolitical trade tensions, Chinese authorities have reportedly launched an antitrust investigation into U.S. chip giant Nvidia, raising concerns about the implications for foreign businesses operating in the country.

The State Administration for Market Regulation (SAMR) announced the probe today, according to several media reports, including from CNBC and Barron’s. A statement from the regulator reportedly cited suspected violations of anti-monopoly laws, though specific allegations remain undisclosed.

News of the investigation follows the Biden administration’s move last week to curb sales of chip technology to China.

Nvidia, a global leader in advanced computing and AI chip technologies, plays a pivotal role in China’s tech ecosystem. Its products are integral to industries such as autonomous vehicles, artificial intelligence, and smart infrastructure—sectors central to Beijing’s technological ambitions.

Fast Company has reached out to Nvidia for comment. We’ll update this post if we hear back.

Market Reaction and Industry Implications

News of the inquiry triggered a dip in the company’s stock, with shares falling more than 2% in premarket trading on Monday. The decline reflects investor apprehension about potential operational restrictions or penalties that could disrupt its significant revenue streams in China.

Nvidia has been among the most closely watched stocks of the year, with its chips powering the AI boom that has taken the world by storm. It’s now one of the world’s most valuable companies by market cap. As of last week’s market close, Nvidia shares have risen more than 195% year to date.

The investigation highlights the challenges multinational firms face in navigating China’s increasingly complex regulatory environment amid heightened geopolitical tensions between the U.S. and China.

The probe would also appear to align with Beijing’s broader plan to assert greater control over its markets while reducing reliance on foreign technology, dovetailing with its “dual circulation” policy, which emphasizes boosting domestic capabilities while engaging with global markets.