Leading chipmaker Nvidia is facing its worst period in over a year, with shares currently down around 30% from October highs. Its share price fell to $168.89 on November 10, near its low for the past year.
This comes down to two factors: one being related to its CEO and the second being AI industry wide.
Investigation
On Sunday November 8, Nvidia's board announced it would carry out an independent investigation after reports came out that its CEO Jensen Huang was the target of a foreign intelligence operation. Reports from CNBC, The Hill and others state that Jensen was in a close personal relationship with an executive from a Chinese partner firm, who had allegedly leaked information to Beijing.
However, the board stated that there is no reason to believe national security or any Nvidia secrets were leaked, and they will look into all the information they have available.
The Hill reported that Huang admitted to the affair via a memo to staff. He has stated he is committed to staying as CEO.
The spying allegations have not been proven and the investigation is ongoing.
Market reaction
The share price closed around 4% lower on Monday November 9 despite the overall market rising. A shareholder lawsuit was filed against the company on the same day. Citigroup reduced its target price, however kept its buy rating.
Price was already declining
The price began to decline on November 5 during a broad sell-off in AI chip stocks. There was no announcement from the company. Investors have been questioning whether the massive investment in AI data centres will pay off, and increased interest rate fears have impacted the tech sector.
What happens next
Nvidia is expected to release its quarterly earnings on November 17. The main question is whether Jensen will stay as CEO.