Nvidia shares down 30% as chief executive Jensen Huang steps down
Shares of US chipmaker Nvidia have lost more than 30% since their October record, after co-founder Jensen Huang resigned as chief executive on 12 November. The company is hit by a scandal over his private life, unproven suspicions of Chinese intelligence links and investor doubts about AI spending.
Shares of Nvidia, the US chipmaker whose processors underpin artificial intelligence systems, have fallen by more than 30% from their record high on 6 October. According to Reuters, on 12 November the company announced that co-founder Jensen Huang had resigned as president, chief executive and board member, posts he held for more than three decades. The move has left investors uncertain about the company's direction.
The share price drop
On 12 November Nvidia stock fell as much as 14.3% during trading but closed down 4.34% at $166.19 a share. CBS News reported that the company's market value shrank by almost $500 billion in less than a week. A Reuters analysis shows the share price has dropped to about 12 times forecast earnings, the lowest such valuation since 2012.
The scandal around Huang
At the end of October, reports emerged about Huang's relationship with businesswoman Alice Huang, who is linked to Singapore-based AI infrastructure firm Megaspeed. US intelligence officials reportedly suspect she may cooperate with Chinese intelligence; this has not been confirmed. TechCrunch writes that Megaspeed bought about $4.8 billion worth of Nvidia chips over two years and has drawn the attention of US and Singapore investigators over possible circumvention of export restrictions.
On 8 November Huang publicly admitted being unfaithful to his wife and pledged to cooperate with an independent investigation launched by Nvidia's board. Chairs of three Congressional committees demanded explanations about possible national security risks. On 11 November The New York Times reported on an alleged relationship with Nvidia vice president Kimberly Powell, which she and Huang have not publicly confirmed.
Leadership change and the market
Chief financial officer Colette Kress is now interim chief executive, and Harvey Jones chairs the board. The company is searching for a permanent leader.
Financial experts say the slide also reflects concern over returns on AI investment, competition and interest rates. Analysts still forecast revenue growth of about 92%. On 12 November AMD shares rose 5.9% and Broadcom's 5.5%. The next tests are the earnings report and the choice of a new chief executive.
