Nvidia Shares Plummet as Board Considers Jensen Huang’s Future as CEO

Nvidia’s shares sank Thursday, sending tremors through global markets, as the company’s chief executive, Jensen Huang, stepped down from his role.

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

Nvidia has emerged as central to the A.I. economy because its chips — or graphic processing units — help train and power models across the industry. It has also become a central bank of sorts for several A.I. companies, because its finances are deeply intertwined with those of everyone from frontier A.I. labs to neoclouds, which rent out computing power.

“This is an Nvidia problem before it is an A.I. problem,” said Mark Malek, chief investment officer at Siebert Financial. But he added that Nvidia’s woes could trickle through to other companies.

“Where I would be careful is with the smaller A.I. cloud companies that leaned on Nvidia’s checkbook,” he said. “If the new regime gets more conservative about financing its own customers, that is where it shows up first.”

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

With the change in Nvidia’s leadership, investors face uncertainty about one of the poster children of the A.I. trade and how its problems could affect the broader economy.

Yields on the 10-year U.S. Treasury note rose above 5 percent on Thursday for the first time in weeks. Yields go up when Treasury prices go down.

Among the hardest hit stocks on Thursday were cloud computing providers that have strategic partnerships with Nvidia. Coreweave sank nearly 7 percent and Nebius plunged nearly 17 percent. Nvidia’s rivals, on the other hand, ticked higher. AMD and Broadcom rose nearly 6 percent on Thursday.

The broader U.S. market, weighed down by Nvidia’s troubles, ended the day in the red. The S&P 500 and tech-heavy Nasdaq dipped around 0.4 percent.

Nvidia’s woes reverberated through global markets as well. Taiwan’s TSMC, which produces chips designed by Nvidia, fell nearly 2 percent. But South Korea’s Samsung, which competes with Nvidia on some business lines, gained 1 percent. Shares in Europe’s largest tech 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 A.I. boom, which has helped to drive U.S. stock markets to new highs in recent years.

Nvidia’s board deliberations came after revelations that Mr. Huang had an affair with an executive who reports to him as well as with a woman whom U.S. intelligence has identified as a Chinese spy.

Some market analysts covering Nvidia have begun to downgrade their forecasts for its stock. Though the chipmaker is expected to remain a critical part of the A.I. build-out, some noted rising concerns about its governance and lack of a clear succession plan. They argued that these revelations have fundamentally changed Mr. Huang’s position in the tech world, and it was unclear what the implications of his departure from Nvidia could be.

Analysts at Bernstein downgraded Nvidia and sharply lowered their target for its share price. “Our gut tells us that we probably haven’t yet fully probed the depths of what might be found here,” they wrote. “We’ve had enough, and prefer to watch from the sidelines.”

Analysts at RBC Capital Markets also slashed their forecast for the stock, citing the lack of a formal succession plan for chief executive. “Whether any individual can replicate Huang’s singular combination of technical vision, ecosystem-building acumen and ability to serve as the global face of the A.I. revolution remains an open question,” they noted.

Nvidia’s stock is down about a third from its peak at the start of October, putting the company deep in a bear market, defined as a drop of 20 percent or more from a recent high.

Although the chipmaker retains a central role in the A.I. revolution, said Ken Mahoney, chief executive of Mahoney Asset Management, he added that there could be more “rumblings” under the surface for investors looking to buy the dip.

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

Nvidia became the world’s largest public company by market value for the first time in 2024, exerting an outsize influence over major indexes like the Nasdaq Composite and the S&P 500. Analysts still expect Nvidia to make a profit of well over $200 billion this year, with its chips in high demand as tech companies rush to build giant A.I. data centers. It reports its quarterly earnings next week.

The scandal surrounding Nvidia has buffeted its stock a week after turbulence in the wake of the midterm elections. Several tech stocks took a beating after investors worried about a slowdown in the development of data centers pushed by Democrats elected to state legislatures, knocking Nvidia below Apple as the world’s biggest public company.