U.S. antitrust authorities have reportedly initiated an early-stage investigation into NVIDIA Corp. (NASDAQ:NVDA) over its potential dominance in the artificial intelligence chip market.

What Happened: The Justice Department's antitrust division has contacted Nvidia to inquire about its contracts and partnerships, The Wall Street Journal reported on Sunday, citing people familiar with the matter.

The investigation is in its early stages, and no subpoenas have been issued to Nvidia for internal documents. However, the department may issue a subpoena in the coming months if a more extensive investigation is deemed necessary, according to the report.

The Federal Trade Commission is also examining investments by major tech companies like Microsoft Corp, Amazon.com, and Alphabet Inc. in AI startups to determine if they received any competitive advantages.

The Justice Department and FTC's proactive approach contrasts with their previous hands-off stance with tech giants like Google and Meta Platforms subsidiary Facebook.

Nvidia's rapid growth in the AI sector has drawn global antitrust scrutiny, including from the European Union, the U.K., China, and South Korea. The company has received various requests for information about its sales and partnerships, according to the report.

Nvidia maintains that its market position is due to the superior performance of its AI chips and asserts that it does not require exclusivity from its customers. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them," said the company, according to the report.

Nvidia and the DOJ did not immediately respond to Benzinga's request for comment.

Why It Matters: The investigation into Nvidia comes at a time when the company is under significant scrutiny from multiple fronts. Last week, Nvidia confirmed that it had not received a subpoena from the U.S. Department of Justice, despite the ongoing investigation into potential antitrust violations.

In the same week, Nvidia's stock saw a 14% decline amid broader market concerns. However, portfolio managers remain optimistic about the company's long-term prospects, predicting significant revenue and stock growth.

Additionally, analysts have raised concerns about Nvidia's heavy reliance on a small number of customers for its revenue. Nearly half of its $30 billion second-quarter revenue came from just four customers, a situation described as "highly unusual."

Despite these challenges, Nvidia remains a sector favorite, with analysts maintaining a positive outlook on its future tied to large language models and gaming.

Price Action: Nvidia closed at $102.83 on Friday, down 4.09% for the day. In pre-market trading, the stock is up 1.04%, reaching $103.90. Year-to-date, NVDA has gained 113.47%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote