Nvidia CEO Jensen Huang just made his already surprisingly cheap stock that much cheaper

Not helping the firm.

Nvidia’s (NVDA) board of directors has launched anindependent investigation into reports that a woman CEO Jensen Huang had an affair with was allegedly spying on him for the Chinese government.

Huang admitted to the affair on Sunday in an email to employees.

Shares fell 5% in premarket trading on Monday as a dark cloud settled over Nvidia and its once-Teflon CEO’s future.

It also puts a spotlight on how far the stock has fallen from Wall Street’s good graces in recent months.

For a high-growth play on the future of AI, Nvidia’s stock was already trading like a run-of-the-mill S&P 500 member that sells construction equipment or packaged food.

The fresh assault on AI stocks since Election Day has caused Nvidia’s already “cheap” PE ratio to collapse to almost shocking levels.

Nvidia’s current PE ratio of 13 times is about 40% below its median trough PE ratio of 22 times, points out Evercore ISI analyst Mark Lipacis in the chart below.

Shares of the AI chip darling had fallen 22% in the month before news of Huang’s affair broke.

“So NVDA is making the SOX look cheap,” Lipacis said, referencing the Philadelphia Semiconductor Index, which is down 30% in the last month.

There several drivers behind Nvidia’s PE meltdown.

Free cash flow is drying up at Big Tech leaders such as Alphabet (GOOGL), Meta (META) and Amazon (AMZN), and capex is going up dramatically. Investors are questioning whether this ratio is totally out of whack given more realistic growth projections around AI.

There is concern these hyperscalers will have to cut back on capex in 2027 to appease nervous investors while also dealing with the data center realities following the blue wave on Election Day.

All of this could mean fewer than expected AI chip orders from Nvidia, at the same tie as Huang deals with a fresh public relations nightmare.

“For investors, key issues are likely potential governance implications, increased regulatory scrutiny and export-control compliance of the flow of H200 chips into China (<1% of DC sales) and routed through other intermediaries, and long-term impact on leadership stability,” Citi CEO Atif Malik said.

Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show, the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team.