NEW YORK (AP) — Shares of Nvidia, the chip company at the center of the global artificial intelligence boom, fell Thursday with the sudden departure of CEO Jensen Huang following revelations of an affair with a woman reported to be a suspected Chinese spy.
The company's stock has been under pressure for weeks
, both because of reporting about the affair and questions about a potential bubble in the AI sector.Shares fell 4.3%, but they recovered from
an opening drop of around 14%.
Nvidia’s 30.5% tumble since setting a record high on Oct. 6 is one of the main reasons the S&P 500 index has fallen from its own all-time high set the same day.
The index sits at the heart of many 401(k) accounts, and it has dropped 2.9% below its record.
But without Nvidia, the S&P 500 would likely not have set as many records as it did in recent years. Last year, for example, Nvidia was the biggest contributor to the S&P 500’s gain and had more than double the effect of the second-highest contributor, Alphabet.
The New York Times reported Wednesday that Huang had a second affair with an Nvidia executive who reports to him.
“The old Jensen, the black leather jacket, the Godfather of AI, the rock star viewed as the face of the AI boom, is over and in the past; his value to the company pre and post this week is dramatically different, and the board did what we said it needed to do, which is rip off the band-aid and take Nvidia into its next chapter without him after this dark moment for Jensen and Nvidia," wrote Dan Ives, partner and senior managing director at Yorkville Ives & Co.
Nvidia is now valued at around $4 trillion and has been a major driver in the technology sector. It is one of the reasons the tech-heavy Nasdaq Composite index raced higher for most of this year and also part of the reason the index has slumped 7% in the past month.
As the crisis unfolded at Nvidia, shares of rivals like Advanced Micro Devices and Broadcom have moved sharply higher.
CoreWeave, however, slid almost 7%. Nvidia owns a stake of approximately 13% in the data center and cloud company.
