AI company stocks plummet after Nvidia CEO Jensen Huang steps down following scandal

Global AI-linked stocks fell on Thursday after Nvidia CEO Jensen Huang resigned following a deepening scandal around his affairs, upending the chipmaker's leadership and posing fresh risks to a sector already reeling with funding and regulatory concerns.

Chief Financial Officer Colette Kress will take over as interim CEO as Nvidia looks for a permanent successor, the company said.

As the centerpiece of the AI ecosystem, the chipmaker finances infrastructure built around its chips - a strategy that has drawn scrutiny over circular funding and now risks weighing on the sector as its crisis deepens.

AI stocks have struggled after the Democrats swept the midterm elections, including in states opposed to new data centers, stoking fears that tighter regulation could slow the AI infrastructure build-out.

Nvidia's shares slid 10.3% in premarket trading and put its market value on course to drop below $4 trillion for the first time since July 2025 amid reports that the board was deciding whether to oust Huang.

Neocloud stocks tumble after Huang scandal

Nvidia-backed neocloud firms CoreWeave dropped 13.6% after surging more than 27% in the previous session when its earnings ignited a relief rally in AI stocks.

Other neocloud stocks including IREN and Applied Digital were also trading lower. Nebius dropped 20% after the company said its 2026 revenue would come in at the low end of its previous forecast.

Nvidia has lost about $300 billion in market value since the board announced an investigation on Sunday into Huang's relationship with a businesswoman called Alice Huang, who is alleged to be a Chinese spy.

"He's the face of Nvidia and Nvidia has been front and center of the AI build-out," said Jun Bei Liu, lead portfolio manager at Ten Cap.

"And if we look at how many new cloud data center businesses have been sponsored in this circular financing world, it's pretty much all by Nvidia. And so it has quite a meaningful ramification for what is to come."

Tech firm stock prices drop across the board

Memory chipmaker Micron Technology fell 5.8% and data storage firms Sandisk and Western Digital eased 8.5% and 5.2%. Photonic product makers Lumentum and Coherent and AI server maker Dell eased around 7% each.

Chip-related companies Marvell Technology, Intel, Arm Holdings, and Texas Instruments dipped between 4.5% and 6.3%.

Shares of AMD and Broadcom, which also produce AI chips and compete with Nvidia, however, rose 2% and 1.4%, respectively, on expectations that the turmoil at Nvidia could create opportunity for rivals.

Tech-heavy stock markets across the globe witnessed jitters. Japan and South Korea closed nearly 0.7% lower. Tech stocks in Europe were also down about 1%.

Nvidia short sellers have made about $3.8 billion in paper profits as of last close, and with the share price falling to $163, those gains can swell to about $6.8 billion, according to data analytics firm ORTEX.

Nvidia trades at about 12 times its 12-month forward earnings estimates, its lowest since November 2012, according to data compiled by LSEG.