by mark.thompson business editor
Nasdaq-100 futures fell early Thursday as Nvidia shares slid following reports that the chipmaker’s board is preparing to oust CEO Jensen Huang, according to CNBC. The sell-off in the semiconductor giant has weighed heavily on broader markets, with Nasdaq-100 futures losing 0.97% and S&P 500 futures dropping 0.37%, CNBC reported.
The sudden volatility follows reports from The Wall Street Journal that Nvidia’s board is gearing up to remove Huang from his position. The board is reportedly scheduled to meet as soon as Thursday to decide the fate of the 63-year-old founder, Yahoo Finance reported.
The movement comes amid scrutiny over misconduct and potential security risks. Yahoo Finance reported that investigations are centered on an unreported relationship with Kimberly Powell, 48, Nvidia’s vice president of health care, as well as past contact with an individual suspected by U.S. officials of working with Chinese intelligence.
MarketWatch said that the reports followed revelations of two affairs, including one with a woman U.S. officials suspect of working with Chinese intelligence.
Huang previously addressed his conduct in a memo to employees, stating,
“I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did.”
Yahoo Finance reported.
Nvidia has retained the law firm Wachtell, Lipton, Rosen & Katz to perform an independent investigation into governance and security implications stemming from these interactions, Yahoo Finance reported.
Nvidia shares fell by more than 8% in extended trading, CNBC reported. The decline has had a ripple effect across international markets. In Asia, Japan’s Nikkei 225 fell 0.82% and Hong Kong’s Hang Seng index declined 0.82%, CNBC reported. South Korea’s Kospi fell 1.26%, a decline driven by Nvidia suppliers Samsung and SK Hynix, CNBC reported.
While many chip stocks fell, shares of Advanced Micro Devices (AMD) and Broadcom (AVGO) rose by approximately 4% and 3% respectively in after-hours trading, MarketWatch reported. Conversely, CoreWeave and Nebius Group, both major Nvidia customers, were among the steepest decliners in the Nasdaq-100 during extended trading, MarketWatch reported.
The scale of Nvidia’s influence on broader indices is significant. Bryce Coward, chief investment officer of Meridian Wealth Management, said,
“Most Americans own Nvidia whether they meant to or not.” Bryce Coward
MarketWatch reported, noting the company accounted for about 6.3% of the S&P 500 at the end of October.
The sudden downturn follows a positive regular session on Wednesday, where the S&P 500 advanced 1.3% and the Nasdaq Composite jumped 1.6%, CNBC reported. Investors weighed potential growth in the artificial intelligence sector following CoreWeave's recent earnings results.
However, market experts suggest caution. Callie Cox, director of investment strategy at Plancorp, said,
“Lately, the stock market has been locked in a fierce battle between the hope of AI and the fear around interest rates and inflation. There doesn't seem to be much in between, and something may have to give.”
CNBC reported.
Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, also advised being circumspect. CNBC reported that Samana cited several changing variables, including stubborn inflation, potential Federal Reserve rate hikes, higher long-term interest rates, and AI/data center regulation demands.
On Thursday, market participants are awaiting initial jobless claims data at 8:30 a.m. ET and existing home sales at 10 a.m., CNBC reported.
Earlier coverage: Nasdaq Plunges Into Correction as AI Scrutiny Fears Hit Tech Stocks