Nvidia Falls 7% Premarket as Board Weighs Huang’s Future
Nvidia shares dropped more than 7% in premarket trading Thursday after reports its board may consider CEO Jensen Huang's future. Nasdaq 100 futures fell 0.8% while Dow futures were flat, leaving stock futures mixed as chip rivals gained.
Stock futures were mixed across markets on Thursday as Nvidia shares dropped more than 7% in premarket trading. Reports said the chipmaker's board may be preparing to oust CEO Jensen Huang.
By 06:26 ET, Nasdaq 100 futures had fallen 239 points, or 0.8%. S&P 500 futures were down 30 points, or 0.4%, and Dow futures were mostly unchanged.
In Canada, the S&P/TSX 60 index futures contract was off 1 point, or 0.1%, as of 06:12 ET.
Why Nvidia is under pressure
The selling followed a report that Nvidia's board could meet Wednesday to consider Huang's future. The New York Times has reported that Huang had an extramarital relationship with a company executive. Over the weekend, Huang also admitted to an affair with a businesswoman alleged to be a Chinese spy.
Analysts at Evercore, including Mark Lipacis and Haydn Potgieter, downgraded their rating on Nvidia. They wrote that it is not certain the board will oust the CEO. But it is "not obvious that Nvidia has a succession plan or a visible #2 operational or strategic leader."
A prolonged investigation followed by a departure could leave the company "in a leadership limbo," they said in a research note.
Chip stocks split
Companies tied to Nvidia through circular financing deals also fell. They included CoreWeave, Iren and Coherent. These firms both buy Nvidia's chips and benefit from investments by the chipmaker.
Nvidia's biggest rivals moved the other way. Advanced Micro Devices and Broadcom rose on bets that Nvidia's upheaval could hand them a bigger share of the AI chip market.
Wednesday's rally
US stocks had rallied Wednesday. The S&P 500 gained 1.3%, the Nasdaq Composite rose 1.6% and the Dow Jones Industrial Average added 0.5%. Nvidia shares climbed 2.9% that day, recovering part of deep losses earlier in the week.
Sentiment was lifted by an upbeat outlook from CoreWeave, excitement over a potential Anthropic initial public offering and a surge in revenue at OpenAI.
In Toronto, the S&P/TSX composite index rose 0.67% on Wednesday to close at 36,411.72 points. Celestica and Kinaxis led technology gains. Boyd Group slumped on weaker-than-expected third-quarter adjusted profit, and Lithium Americas lost more than 12% after raising its cost estimate for the first phase of a Nevada project.
Oil prices also stayed in focus after fresh uncertainty over US-Iran negotiations and signs of renewed oil flows out of the Middle East.
