Nvidia shares slide as board reportedly weighs ousting CEO Jensen Huang

what happened

According to Stocktwits, Nvidia shares dropped 7.7% in overnight trading on Wednesday evening. The move followed reports that CEO Jensen Huang had a second relationship, this time with a subordinate, and that the board was reportedly preparing to remove him. Rivals moved the other way: AMD gained 3.5% and Broadcom rose 2.5%, while Intel fell 2%, Micron dropped 2%, Super Micro Computer lost 4.1%, and the iShares Semiconductor ETF (SOXX) slipped 1.6%.

The Kobeissi Letter estimates that Nvidia has lost about $700 billion in market capitalization since the two affairs came to light, and the stock is 28% below its October 6 peak. The company is scheduled to report quarterly earnings on November 17. Bernstein lowered its rating to Market Perform from Outperform and halved its price target to $200. Some analysts quoted by Stocktwits argue Nvidia's product pipeline and customer demand can carry the company without Huang, while others expect a difficult stretch.

Separately, Huang acknowledged on Sunday an affair with a person U.S. authorities suspect of spying for China. Beijing has denied those allegations. Scrutiny has also intensified on Megaspeed, the company that person was linked to.

why it matters

For markets, the episode is a governance risk at the largest supplier of AI chips. It reaches beyond Nvidia to the whole semiconductor sector and the AI trade. The next test comes with quarterly results on November 17, when investors will show how much of that risk they are pricing in.

market impact

Nvidia and chipmakers: leadership uncertainty weighs on NVDA while rivals AMD and AVGO gain relatively

• ▼Nvidia shares pressure down — leadership uncertainty and a possible CEO removal weigh on the stock
• ▲AMD shares pressure up — seen as relative beneficiaries of Nvidia's turmoil

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