Tech & AI
Nvidia faces Justice Department scrutiny over its Hugging Face deal
The Justice Department is reportedly reviewing Nvidia's planned purchase of Hugging Face and how the chipmaker sells to customers, a probe that could slow or reshape the deal.
Quick Read
- Reports say the Justice Department is examining both the Hugging Face deal and Nvidia's wider business practices.
- Officials are said to be asking whether the deal could give Nvidia control of a key AI gateway and hurt rivals.
- Nvidia shares fell 0.8% in regular trading and slid 1.6% after hours.
- The reports gave no timetable for a decision.
What is the Justice Department examining?
The Justice Department is looking into Nvidia's (Nasdaq: NVDA) planned purchase of Hugging Face, according to reports. The review reportedly reaches beyond that single deal.
Why it matters: Officials are also said to be studying how Nvidia buys and invests in other companies and how it sells to customers. One question is whether the company pressured buyers.
A central concern is whether owning Hugging Face could put Nvidia in charge of a key gateway for distributing AI. Officials are also weighing whether the deal could let Nvidia put rival companies at a disadvantage, the reports said.
How did Nvidia's shares trade?
Nvidia shares fell 0.8% in regular trading on Thursday, closing at $213.66. The company lost $41 billion in market value.
In after-hours trading, the shares slid 1.6% to $210.15. The stock now stands 10.7% below its 52-week high of $239.24.
Other large technology names were also weak. The Nasdaq-100 slid 1.4%. The S&P 500 fell 0.3%.
What could the review mean for the deal?
A government merger review can approve a deal, demand changes or end in a lawsuit to block it. A long review could delay the purchase or alter its terms.
An inquiry is not a finding of wrongdoing. The reports gave no timetable for a decision. They also did not say whether officials might go to court.
For readers
What it could mean for you: People whose 401(k) or IRA holds an S&P 500 or total-market index fund own a slice of Nvidia, a company valued at $5.1 trillion. Index funds weight holdings by size, so news about Nvidia reaches them more than news about smaller firms. The review could grow into a challenge to Nvidia's deal-making or sales practices. If it does, it could weigh on the shares and, through them, on broad and technology funds. A smooth approval might ease that pressure.
Questions and answers
Why is the Justice Department looking at Nvidia?
According to reports, officials are examining Nvidia's planned purchase of Hugging Face along with its acquisitions, investments and sales practices. They are said to be asking whether the deal could hand Nvidia control of a key AI distribution gateway.
Could the Hugging Face deal be blocked?
A merger review can end in approval, required changes or a lawsuit to stop a deal. The reports did not say which outcome officials might pursue, and an inquiry is not a finding of wrongdoing.
How did Nvidia stock react?
Nvidia shares fell 0.8% on Thursday to close at $213.66. They slid 1.6% more in after-hours trading.
The numbers
| Nvidia (NVDA) price | $213.66 |
|---|---|
| Nvidia (NVDA) change | −0.80% |
| Nvidia (NVDA) market value | $5.1 trillion |
| Nvidia (NVDA) 52-week high | $239.24 |
| S&P 500 change | −0.30% |
| 10-year Treasury yield | 4.98% |
Thursday’s close
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