- The U.S. session confirmed the overseas sell-off. Nvidia opened at $173.07, versus Friday’s $186.64 close, and fell as low as $170.24, a drop of 8.8% by our calculation, before paring losses to trade 4.2% lower at $178.76 as of 10:45 a.m. ET, according to CNBC data. CoinDesk reported the stock lost more than $250 billion in market value on Monday.
- The value at stake is enormous even after the bounce. With Nvidia’s market capitalization at $4.31 trillion and the stock down $7.88 a share at 10:45 a.m. ET, the remaining loss equals roughly $190 billion by our calculation, based on the 24.1 billion shares outstanding listed by CNBC.
- The pain is Nvidia-specific. The PHLX Semiconductor Index rose 5.4% and the Nasdaq gained 2.4%, while CNBC said AMD, Marvell, Arm, Intel and Qualcomm all climbed, suggesting investors are pricing a governance risk at Nvidia rather than a collapse in AI chip demand.
- Wall Street expects the cloud to linger. “At a minimum we suspect the overhang is going to be around for a while,” Bernstein wrote, while Baird’s Tristan Gerra warned Washington could pull Nvidia’s license to ship H200 chips to China and close loopholes on shipments to Southeast Asia-based data center operators.
What Happened?
Nvidia’s board opened an independent investigation after reports that Huang was the target of a “foreign intelligence effort.” U.S. intelligence agencies say Alice Huang, an executive at cloud company MegaSpeed, has been passing information to Beijing, according to The New York Times and the Financial Times, as cited by CNBC. In an email to staff, Huang admitted, “I was unfaithful to my wife,” and Nvidia said he fully supports the review and has committed to cooperating with it. China’s Foreign Ministry called the spy narrative unsubstantiated. The stock had already fallen nearly 8% last week as reports of Huang’s ties to the suspected spy intensified, and The New York Times first reported the alleged targeting on Oct. 29.
Why It Matters?
The key investor question is leadership. Dan Ives of Yorkville Ives & Co. called it a “black eye moment” and said that while the Street thinks Huang probably stays, “given the board investigation, anything could happen, and that creates a huge uncertainty.” Clear Street said the larger risk is to “sentiment and valuation” if governance uncertainty compounds concerns about AI infrastructure spending, and Raymond James said the episode could strengthen congressional support for the MATCH Act, which would further restrict chip and chipmaking-equipment sales to China. Many firms kept their calls, including Baird at outperform with a $500 target, Raymond James at strong buy with $515 and Bernstein at outperform with $400.
What’s Next?
Nvidia reports third-quarter earnings on Nov. 17 and hosts a major conference in Washington at the end of the month, while congressional Republicans have asked Huang for a closed-door hearing later this month that Baird expects to focus on GPU exports. Panmure Liberum’s Joachim Klement said the damage could spread to other chipmakers if Huang’s position is “endangered” and Nvidia cuts back support for partners. Melius, which rates the stock a buy with a $315 target, argued the headlines are unlikely to change near-term purchase decisions “amidst a massive compute shortage.”
Affected Tickers and Coins: NVDA, AMD, MRVL, ARM, INTC, QCOM
Source: CNBC, CNBC, CNBC Market Data, CoinDesk
