Nvidia shares plunged more than 11% in early trades on Thursday after CEO Jensen Huang resigned over an affair with an alleged Chinese spy and another report surfaced that he also had an affair with a subordinate.
The tech-heavy Nasdaq-100 slipped 0.6% and S&P 500 gained 1.3%. Nvidia is down in total 17% in November and has lost nearly $500 billion in market value.
The CEO behind the second largest company in the world took what appeared to be a fatal blow on Wednesday night when the New York Times reported that Huang had another extramarital affair — this time with another executive who reported to him.
The Wall Street Journal reported that the board was in discussions to oust Huang after the report of the second affair broke.
Analysts have given the stock a rare downgrade from buy to neutral as new updates continue to send ripples throughout the markets.
“Downgrading to Neutral until uncertainties regarding U.S. government action likely resulting from the upcoming congressional hearing are lifted, U.S. government investigations reach their conclusions, revenue impact from risk channel near-term adjustments along with potential charges is quantified, and uncertainties around CEO tenure clear,” wrote Tristan Gerra, an analyst at Baird, a wealth management firm.
Wall Street analysts told CNBC that if Huang is removed as CEO, the stock could fall by 20%.
The chip manufacturer is behind nearly all of the world’s data centers and at the heart of the US’s AI infrastructure.
Investors have worried what it would mean if Huang was no longer at the helm of the company he co-founded more than 30 years ago.
Nvidia’s outsized power in the industry has sent tremors throughout global markets.
Chinese tech giant Alibaba is down 7%.
The company is a major customer of Megaspeed, the data center company where Alice Huang, the accused Chinese spy, works and that also has a business relationship with Nvidia.
TSMC, the largest contract chip maker based in Taiwan, fell by 2%.
Rivals of Nvidia seemed to benefit from the company’s crisis.
AMD and Broadcom were up 3.9% and 3% in premarket trading, respectively, according to CNBC.