Nvidia plunges but tech shares rebound, oil prices slump
Oil prices fell 5% on hopes for diplomatic talks aimed at ending the US-Iran war.
Wall Street's main indices opened higher on Monday, with the tech-heavy Nasdaq surging 0.9%. However, this rebound was tempered by Nvidia's sharp decline following an investigation into its CEO, Jensen Huang, over allegations of an affair with an alleged Chinese spy. Oil prices also dropped by 5% as hopes increased for diplomatic talks to end the US-Iran war.
Chipmakers and other companies linked to the artificial intelligence (AI) boom experienced significant losses after the US midterm elections, which saw Democrats win control of both chambers of Congress. This led to speculation that lawmakers might seek to regulate tech firms more closely. Briefing.com analyst Patrick O'Hare attributed the market's rebound to a combination of the decline in oil prices and investors' inclination to buy into last week's AI-related losses.
The Philadelphia Semiconductor Index, which includes major chipmakers and AI firms, rose by 1.9%. However, Nvidia's shares fell more than 8% at the start of trading in New York. Analyst Patrick O'Hare noted that Nvidia was currently being treated as an isolated incident, with investors penalizing the stock for Jensen Huang's personal transgression.
The uncertainty surrounding Huang's situation, combined with the potential for congressional inquiries and heightened scrutiny over selling chips to China, did not appear to have a systemic effect on the market.
The New York Times reported that US intelligence officials concluded a Chinese executive linked to a Singapore-based data center company called Megaspeed had been funneling information to Beijing. Huang's wife, Alice Huang, also known as Huang Le, developed a close relationship with the Nvidia CEO. Huang acknowledged having an affair and apologized to his family and company staff in a message to employees.
Nvidia, a global leader in producing AI chips and one of the world's most valuable companies with a market capitalization of US$5 trillion, experienced a significant drop in share price. Technology analyst Dan Ives at Yorkville Ives said the crisis would likely spur congressional inquiries and create an overhang on the stock due to Huang's importance to Nvidia's strategy.
China dismissed the allegations, calling them "baseless." European stock markets also rose in the afternoon following gains across much of Asia, while the dollar weakened against its main rivals.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
