TLDR
- Nvidia fell 6.8% on a report its board may remove CEO Jensen Huang.
- CoreWeave, Dell and Super Micro dropped as investors weighed the AI trade.
- AMD rose 3.3% and Broadcom gained 1.8% as Nvidia’s rivals benefited.
- Strategy fell 5.4% after MSCI set new index eligibility rules.
- Memory, networking and hard-drive stocks also slid before the open.
Stock futures fell on Thursday after reports of a leadership crisis at Nvidia. The news pulled down many stocks tied to artificial intelligence.
Nvidia shares dropped 6.8% in early moves. The Wall Street Journal reported that the company’s board is preparing to remove CEO Jensen Huang over two extramarital affairs. Nvidia did not immediately respond to a request for comment from Barron’s.
Stocks Tied to Nvidia Slide
Investors looked at companies that rely on Nvidia’s business. They tried to judge what a change at the top could mean for the AI boom.
CoreWeave, a cloud-computing provider, sank 6.3%. Super Micro fell 5.2%, and Dell declined 2.8%. Both companies build servers.
Other AI-linked names also traded lower before the opening bell. These included memory-chip maker Micron and memory-card supplier Sandisk. Optical networking firms Coherent, Lumentum and Marvell were down as well.
Hard-drive makers Seagate and Western Digital also fell. Together, the moves show how widely the AI trade was affected.
Some of Nvidia’s rivals moved the other way. Advanced Micro Devices rose 3.3%, while Broadcom added 1.8%.
What Led to the Drop
Nvidia had already fallen in after-hours trading. That followed a New York Times report that Huang had a second extramarital affair. The report said he had a relationship with Nvidia executive Kimberly Powell.
The Times said the two were seen being affectionate at a hotel during a company conference in March. Yahoo Finance reported that Nvidia shares were down 8.04% at one point.
Huang is also under investigation over a separate affair with a woman named Alice Huang. She is alleged to be a Chinese spy. Huang admitted the relationship in a memo to employees.
“I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,” he wrote.
The Information reported on Tuesday that Alice Huang is believed to be tied to a network of Chinese companies. It said the network helped ship $7.5 billion in chip sales to China.
President Trump stood by Huang and called him “an honorable guy.” He also said on Monday that the FBI was looking into the relationship.
Nvidia’s board said in a statement on Sunday that it has “no reason to believe that either national security or Nvidia secrets were compromised.” The board is reportedly meeting to decide whether to remove Huang.
Away from the chip sector, Strategy fell 5.4%. Index provider MSCI set new eligibility rules that would exclude the Bitcoin investor from its global benchmarks. The change would take effect at the end of the month.
