Nvidia shares plunge after Jensen Huang steps down as CEO

Nvidia shares fell on Thursday, sending shockwaves through global markets as the company’s CEO Jensen Huang stepped down from his role.

Shares of Nvidia fell more than 4 percent by the time markets closed Thursday, wiping nearly $1 trillion from the company’s market value this month alone. Shares fell as much as 14 percent on Thursday morning, but pared most of those losses as investor concerns about the company’s future without Mr. Huang eased.

Nvidia has become central to the AI ​​economy as its chips — or graphics processing units — help train and power models across the industry. It has also become something of a central bank for several AI companies, as its finances are deeply intertwined with those of everyone from frontier AI labs to neoclouds that lease computing power.

“This is an Nvidia problem rather than an AI problem,” said Mark Malek, chief investment officer at Siebert Financial. However, he added that Nvidia’s woes could spread to other companies as well.

“Where I would be cautious is the smaller AI cloud companies that have been leaning on Nvidia’s checkbook,” he said. “If the new regime becomes more conservative about funding its own customers, that will be the first to appear.”

The company’s board named Colette Kress, Nvidia’s chief financial officer, as its interim chief executive officer.

With a change in leadership at Nvidia, investors face uncertainty about one of the poster children of the AI ​​business and how its problems could affect the broader economy.

The yield on the 10-year US Treasury rose above 5 percent for the first time in weeks on Thursday. Yields rise when government bond prices fall.

Among the worst-hit stocks on Thursday were cloud computing providers that have strategic partnerships with Nvidia. Coreweave fell almost 7 percent and Nebius fell almost 17 percent. Rivals Nvidia, on the other hand, ticked higher. AMD and Broadcom rose nearly 6 percent on Thursday.

The broader US market, burdened by Nvidia’s problems, ended the day in the red. The S&P 500 and tech-heavy Nasdaq were down 0.4 percent.

Nvidia’s troubles have also been reflected in global markets. Taiwan’s TSMC, which makes chips designed by Nvidia, fell nearly 2 percent. But South Korea’s Samsung, which competes with Nvidia in some business lines, gained 1 percent. Shares in Europe’s largest technology company ASML of the Netherlands fell more than 2 percent.

Mr Huang, who co-founded Nvidia in 1993, has become one of the most influential forces in the artificial intelligence boom that has helped propel US stock markets to new highs in recent years.

Nvidia’s board hearings came after revelations that Mr. Huang had an affair with an executive who reports to him, as well as a woman identified by US intelligence as a Chinese spy.

Some market analysts covering Nvidia have started to lower their forecasts for its stock. Although the chipmaker is expected to remain a critical part of building AI, some have noted growing concerns about its governance and lack of a clear succession plan. They argued that the revelations fundamentally changed Mr. Huang’s position in the technology world, and it was unclear what the implications of his departure from Nvidia might be.

Analysts at Bernstein downgraded Nvidia and significantly lowered their price target for the stock. “Our gut tells us that we probably haven’t fully explored the depth of what might be here,” they wrote. “We’ve had enough and prefer to watch from behind.”

Analysts at RBC Capital Markets also cut their forecast for the stock, citing the lack of a formal CEO succession plan. “Whether anyone can replicate Huang’s unique combination of technical vision, ecosystem-building acumen, and ability to serve as the global face of the AI ​​revolution remains an open question,” they noted.

Shares of Nvidia have fallen by about a third from their peak in early October, sending the company deep into a bear market, defined as a drop of 20 percent or more from a recent high.

Although the chip maker maintains a central role in the AI ​​revolution, Ken Mahoney, chief executive of Mahoney Asset Management, said, adding that there may be more “rumbling” beneath the surface for investors looking to buy the dip.

“Ultimately, a lot depends on your investment time horizon,” he said. “Short-term traders face huge uncertainty, while longer-term investors may find opportunity if the company’s fundamentals remain intact.”

Nvidia became the world’s largest public company by market value for the first time in 2024 and has had a huge impact on major indexes like the Nasdaq Composite and the S&P 500. Analysts still expect Nvidia to earn well over $200 billion in profit this year as its chips are in high demand as tech companies rush to build giant AI data centers. It will announce quarterly earnings next week.

The Nvidia scandal hit its stock a week after midterm election turmoil. Several tech stocks took a beating after investors worried about a slowdown in data center development pushed by Democrats elected to state legislatures, knocking Nvidia below Apple as the world’s largest public company.