Nvidia stock (NVDA) extended losses early on Wednesday after sinking more than 9% to close at $108 as the overall market declined on the first trading day of the month.

Its shares fell another 3% in premarket trading after the Department of Justice sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws, an escalation of its investigation into the dominant provider of AI chips.

The AI chipmaker was the worst performer among the "Magnificent Seven" stocks on Tuesday, falling to its lowest level since Aug. 12.

"I don't think it's down on isolation; lots of things are down today," Stacy Rasgon, Bernstein senior analyst, told Yahoo Finance in a live interview on Tuesday morning.

Technology (XLK) stocks led the market declines, followed by Energy (XLE) and Industrials (XLI).

Tuesday's decline comes less than a week after Nvidia posted quarterly results that beat consensus estimates but failed to send the stock price higher.

"The print was actually very good. The issue people had on it was not so much the revenue, it was the gross margins. They're guiding gross margins down a little bit into the end of the year," said Rasgon.

Nvidia is expected to ramp up production of its next-generation Blackwell chip in the fourth quarter of this year, which could send the stock higher, said Rasgon.

"I think right now people are worried, kind of [treading] water a little bit until those products get into the marketplace," said Rasgon. "Once they start ramping Q4, Q1 ... if that ramp is solid, I expect the stock would probably follow."

Wall Street remained mostly bullish on the stock following the earnings release, with Stifel analysts reiterating their Buy rating and $165 price target.

"Bigger picture, the modernization of data center compute continues and, in our view, NVDA remains the primary beneficiary," wrote the analysts last week.

Up until last week, Nvidia had led the recent rebound in stocks, climbing nearly 25% in a span of three weeks following a global market sell-off.

Despite Tuesday's losses, the stock is up more than 115% year to date.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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