Nvidia Stock Plummets – $1,000 Billion Wiped Out

The espionage scandal involving Nvidia CEO Jensen Huang has now also had a significant impact on the stock market. On Monday, the U.S. chip giant’s stock plummeted by more than 6 percent at the opening bell.

It is noteworthy that the other U.S. stock markets rose at the same time. Both the S&P 500 and the technology-heavy Nasdaq Composite opened the trading session with gains of more than one percent each.

The sharp drop in the stock price stems from an investigation into possible foreign espionage activities linked to Jensen Huang. Over the weekend, the Nvidia CEO admitted to having an extramarital affair with a businesswoman who is said to have been identified by U.S. intelligence agencies as a Chinese spy. The company’s board of directors has therefore launched an independent investigation.

A trillion dollars in market value lost

For Nvidia, the scandal comes at an inopportune time. The stock was already under pressure even before the scandal broke. Investors are increasingly questioning the high valuations of AI companies and the massive investments in new data centers.

Last week alone, Nvidia’s stock price fell nearly 9 percent. Since hitting a record high in early October, the stock has now fallen more than 21 percent. As a result, about one trillion dollars in market capitalization has been wiped out.

The company is therefore in what is known as a bear market. Stock market experts use this term when a stock is trading at least 20 percent below its recent high.

Just a few weeks ago, Nvidia became the first company in the world to reach a market capitalization of five trillion dollars. Since then, the company has temporarily ceded its position as the most valuable publicly traded company to Apple.

Analysts Warn of Consequences for Nvidia

Jensen Huang’s central role in the company is causing additional uncertainty. The 63-year-old co-founded Nvidia more than 30 years ago and is considered one of the key figures in the global AI boom.

Bernstein’s analysts therefore refer to this as a “key person risk.” They note that Nvidia is no ordinary company and Huang is no ordinary CEO.

Technology analyst Dan Ives also expects the scandal to have political consequences. He anticipates at least several investigations by the U.S. Congress. The scandal is likely to continue to weigh on the stock for the time being.

However, Nvidia’s board of directors emphasizes that there is currently no reason to believe that trade secrets or U.S. national security have been compromised.

Despite the sharp drop in the stock price, many analysts remain optimistic. According to data from FactSet, more than 90 percent of the experts who cover Nvidia continue to recommend buying the stock.

What’s behind the Jensen Huang scandal? Who is the alleged Chinese spy, and what role does the company Megaspeed play? blue News answers the most important questions in a detailed overview of the Nvidia scandal.