Nvidia shares tumble as CEO resigns, major indices mixed

Nvidia shares plunged on Thursday following the resignation of CEO Jensen Huang, who is accused of having an affair with a woman suspected of spying for China. The news of Huang's second affair with an Nvidia executive who previously worked under him further fueled mounting pressure on him. The AI giant's groundbreaking semiconductor technology is a key driver of the artificial intelligence boom.

Early in trading, the Dow Jones Industrial Average rose by 0.1% to 52,518.60, while the S&P 500 fell by 0.3% to 7,598.94 and the tech-focused Nasdaq Composite Index slipped by 0.4% to 25,362.29.

Other AI stocks had mixed results, with Alphabet and Microsoft gaining while Oracle and CoreWeave declined. AMD, seen as a rival to Nvidia, experienced a two percent increase. After initially dropping more than 13%, Nvidia's shares later fell by 7.1% after the company announced a series of changes, including the appointment of CFO Colette Kress as interim CEO.

Some analysts believe that Huang's departure will not significantly impact short-term AI initiatives already in progress. Ryuta Makino, a software and semiconductor analyst at Gabelli Funds, stated that Nvidia is expected to maintain its performance for the upcoming year. However, Makino warned that the company may lose market share in the long run, potentially affecting the 2029 and beyond timeframe.

Adam Sarhan of 50 Park Investments pointed out that the Nvidia scandal is occurring during a period of weakness in AI stocks, fueled by concerns about overcapacity and heightened by US political tensions surrounding data centers. Sarhan expressed uncertainty about investing more in AI until the extent of the breach of confidentiality is determined, questioning whether Huang was complicit in sharing secrets with China.