NVDA Stock Alert: What to Know as Nvidia Faces DOJ Probe

Nvidia (NVDA) stock inched lower on Sept. 10 following reports that the U.S. Department of Justice (DOJ) is intensifying its regulatory scrutiny of the titan’s $17 billion deal with artificial intelligence (AI) startup Groq. 

As investors reacted to the DOJ news, NVDA tanked below its 20-day moving average (MA) today, indicating the downward momentum may sustain in the near term. 

At the time of writing, Nvidia shares are up more than 15% versus the start of this year. 

What the DOJ Probe Means for Nvidia Stock

The Department of Justice is investigating whether Nvidia structured its agreement with Groq to avoid antitrust scrutiny. 

Announced last year as a non-exclusive technology licensing deal, the arrangement also brought Groq’s chief executive Jonathan Ross and other senior executives to Nvidia, while Groq remained independent. 

The DOJ reportedly opened its inquiry shortly after the deal was announced and has since issued Nvidia a formal request for information. 

The development is bearish for NVDA shares because it adds regulatory uncertainty around the titan’s aggressive expansion across the AI ecosystem. 

Potential fines and tighter scrutiny of future deals could also limit Nvidia’s ability to consolidate technology and talent, potentially weighing on investor sentiment. 

Should You Buy the Dip in NVDA Shares?

The recent pullback in Nvidia stock may actually be a compelling buying opportunity for long-term investors since the DOJ is reportedly unlikely to force the deal to be unwound.

Plus, the company’s dominant market positioning remains unmatched, driven by massive enterprise demand for its artificial intelligence chips and robust 66% operating margins.

Trading at about 24x forward earnings — well below its historic five-year valuation averages — the AI stock’s risk-reward profile favors buying on the dip. 

A small 0.46% dividend yield makes Nvidia even more attractive to own for the long term. 

How Wall Street Recommends Playing Nvidia

Wall Street analysts remain bullish as ever on NVDA stock for the next 12 months. 

According to Barchart, the consensus rating on Nvidia sits at “Strong Buy,” with the mean price target of about $325 indicating potential upside of roughly 45% from current levels. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.