NEW YORK: Nvidia shares sank early Thursday after Chief Executive Jensen Huang resigned from the AI giant following revelations he had an affair with a woman accused of spying for China.
Pressure building on Huang heightened further Wednesday after The New York Times reported that he had another affair with an Nvidia executive who worked under him. The company’s pioneering semiconductor technology has been at the center of the artificial intelligence boom.
About 25 minutes into trading, the Dow Jones Industrial Average was up 0.1 percent at 52,518.60.
The broad-based S&P 500 lost 0.3 percent at 7,598.94, while the tech-rich Nasdaq Composite Index dropped 0.4 percent to 25,362.29.
Other AI stocks were mixed with so-called hyperscalers Alphabet and Microsoft higher and Oracle and CoreWeave dropping. AMD, considered a rival to Nvidia, rose about two percent.
After opening down more than 13 percent, Nvidia shares were later off 7.1 percent as the company announced a shakeup that had begun to look inevitable, appointing Chief Financial Officer Colette Kress to serve as interim CEO.
Some analysts said Huang’s departure won’t affect short-term AI projects already in the works.
“In the near term, I think Nvidia will continue to perform as usual,” said Ryuta Makino, software and semiconductor analyst at Gabelli Funds.
“The fundamentals won’t change for calendar year 2027 and potentially calendar year 2028. A lot of these deals and supply chain are already locked up.”
But Makino said Nvidia “will likely lose market share” over the longer term, affecting 2029 and beyond.
Adam Sarhan of 50 Park Investments noted that the Nvidia scandal comes amid a period of weakness in AI stocks due in part to worries about overbuilding capacity and exacerbated by US elections that showcased public hostility to data center.
On Nvidia, “we don’t know the extent of the line that was crossed,” said Sarha, adding that it is unknown whether Jensen Huang was “complicit” in any sharing of secrets with China.
“Why would I invest more in AI until we figure out what’s going on?” Sarhan said. — AFP umlegacypress.com