Nvidia shares came under heavy selling pressure after co-founder Jensen Huang stepped down as CEO on Thursday, with investors concerned about the leadership vacuum at the world’s most valuable chipmaker. The sell-off threatens to wipe hundreds of billions of dollars off its market capitalisation.
Nvidia shares plunged in overnight and pre-market trading on Thursday following Jensen Huang’s resignation as chief executive, as investors reacted to the sudden departure of the man who led the company for more than three decades.
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The stock was trading at around $160.25, down 7.76% in overnight trading, according to Yahoo Finance data available during the session. It had closed at $173.73 on Wednesday.
The decline deepened to around 10% in pre-market trading, according to the Wall Street Journal, following confirmation of Huang’s departure.
{{/usCountry}}The decline deepened to around 10% in pre-market trading, according to the Wall Street Journal, following confirmation of Huang’s departure.
{{/usCountry}}The sell-off came after Nvidia’s board announced that Huang had resigned with immediate effect amid an investigation into reported personal and business connections that had raised national security concerns. Chief financial officer Colette Kress was appointed interim CEO.
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Why are investors worried?
Huang’s departure has raised concerns about the company’s future leadership and its ability to maintain the strategy that helped it become the biggest beneficiary of the AI boom.
Reuters reported that investors are particularly concerned about whether Nvidia would continue its strategy of financing and supporting the expansion of AI data centres under a new leadership team.
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The company has played a significant role in funding the infrastructure expansion of some of its customers, making its leadership transition important beyond its own business.
The sell-off has also affected other companies linked to Nvidia’s AI ecosystem. Shares of data centre operator CoreWeave and South Korea’s Naver came under pressure, while chipmaking rivals Broadcom and AMD gained.