US stock index futures fell after a report that Nvidia Corp.’s board was considering the removal of Chief Executive Officer Jensen Huang, tempering an earlier rally in technology shares.
Nasdaq 100 futures fell over 1% and S&P 500 contracts lost 0.5% after Nvidia tumbled about 10% in late trading. The company’s board is meeting to discuss Huang’s future after he admitted to an affair with a woman US officials reportedly believe is a Chinese spy, according to a person familiar with the matter.
The New York Times also reported Wednesday that Huang had a relationship with Nvidia healthcare vice president Kimberly Powell, citing multiple people who worked at the company.
Read more: Stocks in news: Tata Power, Cupid, Garden Reach, ITC, Aurobindo Pharma and Vodafone Idea
The crisis may reverberate across Asian markets, particularly among suppliers including Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and SK Hynix Inc. As the dominant provider of chips powering AI, upheaval at Nvidia risks shaking confidence in the trade that has driven much of this year’s global equity rally.
A regional gauge of stocks was little changed early Thursday, with shares in SK Hynix slipping and those for Samsung Electronics paring advances.
The fallout spread across AI-related stocks in late US trading, with server makers Super Micro Computer Inc. and Dell Technologies Inc. falling. Advanced Micro Devices Inc. and Broadcom Inc. advanced on speculation they may benefit from Nvidia’s troubles.
The developments interrupted a strong session for US technology shares. The Nasdaq 100 jumped 2.3% Wednesday, putting it on track for its best week since May, while AI computing supplier CoreWeave Inc. surged 25% on an upbeat outlook before slipping in late trading.
Meanwhile, there were other signs of robust demand for AI. OpenAI’s quarterly revenue reached $10 billion, while Anthropic PBC’s initial public offering was said to be oversubscribed multiple times.
The Nvidia shock now threatens to test investors’ renewed enthusiasm for AI after a recent tech selloff. Strong earnings and sustained spending had helped restore confidence in the trade, even as concerns linger over the impact of a Democratic sweep of Congress on the AI buildout.
“This is an unequivocal negative for Nvidia and the entire AI ecosystem,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “He is not only the face of AI but arguably the architect of the AI infrastructure.”
Beyond equities, investors were also bracing for tighter US monetary policy. The dollar climbed to an 18-month high, with traders fully pricing a quarter-point Federal Reserve hike next month and assigning a small chance of a half-point move.
Global benchmark Brent crude rebounded to near $92.70 a barrel after two days of declines. The move came after a senior Iranian official rejected the prospect of giving up enriched uranium, signaling that peace talks between Washington and Tehran remain stalled.
Some strategists remain constructive on AI after the recent volatility. “The way we look at it, 95% of the correction has already happened,” Mike Wilson, chief US equity strategist and chief investment officer at Morgan Stanley, said on Bloomberg Radio. “We’re pretty confident that the AI build-out is going to continue.”
Elsewhere, gold held losses in early Thursday trading after hotter-than-expected US inflation and hawkish remarks from Fed officials triggered a selloff. Bullion fell as much as 1.2% to trade below $4,000 an ounce during US hours.
“It’s all about the continued re-pricing of the Fed,” said Jeremy Stretch, a strategist at CIBC. “A discussion of either 50-basis-point hike or an acceleration in the pace of tightening from once a quarter is now real.”
