Tech shares came under pressure on Thursday as investors tracked developments at Nvidia, where CEO Jensen Huang faces a board revolt amid a probe into an affair with a woman accused of spying for China. Reports of a separate extramarital relationship and an emergency board meeting late Wednesday piled on the pressure; Nvidia, which is due to report quarterly earnings next Tuesday, slid about 6% in pre-market trading.
Nvidia leadership crisis
Huang has admitted to an extramarital affair reportedly with Alice Huang, a senior executive at Singapore-based data centre company Megaspeed whom U.S. officials believe was working for Chinese intelligence. Beijing has rejected the spying allegations.
A separate report on Wednesday said Huang was also involved in a second extramarital affair with the company’s vice president of health care, Kimberly Powell. That report prompted a last-minute board meeting, but no official announcements have been made on the outcome.
The stock has lost 24% of its value over the past month, wiping around $1.4 trillion off Nvidia’s market capitalisation. “The integrity of the $1 trillion (revenue) forecast, in the wake of this scandal, is likely to be a key question on Nvidia’s earnings call next week,” said Kathleen Brooks, research director at trading group XTB.
Brooks added: “A leadership scandal at one of the world’s biggest companies is enough to bring the tech stock rally to a halt, and the Nasdaq is pointing to a lower open.” She said the Nvidia fallout was “helping to spur a rotation into European markets that are traditionally low-tech.”
London, Paris and Frankfurt climbed in midday deals. Frankfurt’s blue-chip DAX reached a record high above 27,000 points, supported by healthy corporate earnings and recent optimism about the artificial intelligence boom.
Companies linked to the AI sector had enjoyed a healthy bounce in recent days after last week’s sell-off sparked by regulatory concerns following the Democratic sweep of the U.S. Congress. Still, the Nvidia leadership crisis rattled investors on Thursday and sent Asian stock markets lower.
Huang has built Nvidia into one of the world’s biggest and most influential companies, designing advanced chips that are central to the AI buildout that has helped drive markets to record highs. Analysts say the crisis has exposed an alarming lack of a succession plan for Huang: “An abrupt exit without a credible succession plan could force investors to reassess how much of Nvidia’s future depends on Huang personally,” Charu Chanana, chief investment strategist at Saxo Markets, wrote.
Elsewhere in markets, Burberry shares jumped 9% after the British luxury group returned to profit in the first half of the year. Oil prices slipped after a report showed production in the Gulf had increased despite the U.S.-Iran war, while the dollar steadied following gains amid growing expectations the Federal Reserve will increase interest rates next month.
