Newsflash: Nvidia’s shares have dropped sharply at the start of trading in New York, as Wall Street gives its verdict on the company’s spying scandal.
Shares in the chip maker fell by almost 7.5% as soon as the opening bell rang out, as investors respond to the news that CEO Jensen Huang has admitted having an extramarital affair – reportedly with a Chinese spy.
That knocked the shares down to $172.75 each, down from $186.64 on Friday night.
That, by my maths, wipes $335bn off Nvidia’s valuation, following the board’s decision to launch an independent investigation into whether Jensen Huang has been the target of a foreign intelligence effort.
It lowers the company’s value to around $4.16tn, down from $4.5tn on Friday night.
Briefing.com analyst Patrick O’Hare said that Nvidia was being treated as a one-off story by investors for the moment.
“In other words, the stock is being penalised for Jensen Huang’s personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn’t caught up in the notion that this situation is going to have a systemic domino effect,” he said.
Despite the drag from Nvidia, the Nasdaq Composite share index (which contains companies from across the tech sector) is up 2% in early trading.
Nvidia are the top faller on the Dow Jones industrial average (DJIA) in early trading.
Despite the chip giant’s troubles, the DJIA has jumped by 661 points, or 1.3%, to 51,947 points in early trading.
Twenty three of the 30 stocks who make up the DJIA are in positive territory, with investors cheered by a 4.7% fall in the oil price today.
Jensen Huang’s personal fortune has taken a heavy hit too.
Nvidia’s CEO owns around 3.61% of the company’s stock. At the end of last week, that stake was worth $162bn.
But today’s share price tumble means its value has dropped to $150bn, after Huang admitted cheating on his wife.
This morning’s sell-off has pushed Nvidia’s shares down to a seven-month low.
Newsflash: Nvidia’s shares have dropped sharply at the start of trading in New York, as Wall Street gives its verdict on the company’s spying scandal.
Shares in the chip maker fell by almost 7.5% as soon as the opening bell rang out, as investors respond to the news that CEO Jensen Huang has admitted having an extramarital affair – reportedly with a Chinese spy.
That knocked the shares down to $172.75 each, down from $186.64 on Friday night.
That, by my maths, wipes $335bn off Nvidia’s valuation, following the board’s decision to launch an independent investigation into whether Jensen Huang has been the target of a foreign intelligence effort.
It lowers the company’s value to around $4.16tn, down from $4.5tn on Friday night.
More than $200bn could be wiped off Nvidia’s value when Wall Street trading begins, in 15 minutes.
The company ended last week worth $4.5tn, making it the most valuable company in the world.
So with shares down around 6% in premarket trading, that market cap is set to drop.
As if Nvidia didn’t have enough to worry about, it also faces a new challenges from Alphabet.
Google’s parent company is rolling out a broader array of artificial intelligence chips, Bloomberg reports, adding:
The company is introducing two new variations of its tensor processing units, or TPUs, custom-made semiconductors that help develop and run AI software. The latest chips will address the need for confidential computing and help models access a wider range of information when handling queries.
The plot thickens!
The FinancialTimes are reporting that Alice Huang pitched an AI chips deal to China-based investors, touting her ability to secure Nvidia’s coveted GPUs and her commercial relationship with Chinese tech giant Alibaba.
They say:
In early 2025, Alice Huang and her business partner Kang Wei sought investment for a south-east Asia data centre project worth several hundred million dollars, according to two investors pitched on the deal.
The pair said they had “no problem securing GPUs” as a key pillar of the deal and cited Alibaba as a client of the project, according to one investor present.
As covered earlier (here), a US hedge fund claimed six months ago that Alibaba had been secretly funding Megaspeed – Alice Huang’s Singapore-based cloud computing company….
Polymarket are running a prediction market on whether Jensen Huang will resign, or be removed, by the end of the year.
It’s currently running at 15%, suggesting that Nvidia’s CEO is expected to survive until 2027…..
Tom Stevenson, investment director at Fidelity International, says:
“Stock markets ended last week digesting one AI-focused crisis and they have started the new one assessing another.
“AI has driven markets higher and it has started to drive them lower again. For good or ill, it is certain to be the dominant story for the foreseeable future.
“Renewed pressure on Nvidia shares has added to the uncertainty surrounding the sector, just as markets were starting to show tentative signs of stabilising after the most significant wobble to date in the ongoing AI boom. With investors already questioning the scale of spending on AI infrastructure and the returns it will generate, sentiment towards technology stocks remains fragile.
