Nvidia Falls to 1-Year Low as Huang Quits; Rivals AMD, Broadcom Jump
Nvidia shares sank to their lowest level in more than a year before closing about 4% lower after CEO Jensen Huang resigned. Chip rivals rose, cloud firms renting Nvidia chips fell, and investors now watch next week's earnings report.
Nvidia shares closed about 4% lower after CEO Jensen Huang resigned and left the board, putting the stock market Nvidia set to face a bruising test when the chipmaker reports earnings next week. The stock had earlier hit its lowest level in more than a year.
At the low, Nvidia was briefly $2 trillion below its October record. It pared most of that loss by the close.
Huang quit effective immediately after reports of three affairs, one involving an alleged Chinese spy. Chief Financial Officer Colette Kress is now interim CEO. Nvidia still plans to report earnings as scheduled.
Rivals up, cloud firms down
The selling was uneven. Nebius and CoreWeave, cloud companies that rent out Nvidia chips, took the worst of it. Broadcom and AMD each rose more than 5%, and most of Big Tech held up.
Fortune reported that the turmoil began November 8, when Huang admitted an affair with Alice Huang, an executive at Singapore-based Megaspeed International. U.S. officials believe she is an agent of China's Ministry of State Security. The two are not related. By one tally, Nvidia has lost more than $450 billion in market value since.
The web of Nvidia deals
Nvidia owns stakes in Intel, SpaceX, CoreWeave, Coherent and Safe Superintelligence. It bought $3 billion of Meta's stock offering and has pledged up to $10 billion to Anthropic ahead of that company's IPO next week. It holds a $30 billion stake in OpenAI, plus a preliminary deal to invest as much as $100 billion more.
Many of those companies buy Nvidia's chips. Its latest quarterly filing lists about $530 billion in commitments and guarantees, by Yahoo Finance's count. That includes roughly $65 billion to rent back cloud capacity and a guarantee of up to $105 billion on OpenAI's Ohio data center leases.
"It does bring into question what we've been talking about for ... the better part of the last year, which is a lot of these circular relationships," said Liz Thomas, chief market strategist at SoFi.
Other pressure points
Customers are paying more slowly. Nvidia's receivables hit $63 billion last quarter, with bills taking about 60 days to collect, up from 45. Nvidia blamed longer terms on big deals.
The value of its largest public stock holdings has fallen by more than $20 billion since June, led by Intel. Nvidia's balance sheet offers a cushion: about $99 billion in cash and securities against $33 billion of debt at the end of July.
For ordinary savers, the direct exposure is limited. Leonard Gilroy of the Reason Foundation's Pension Integrity Project estimated the average American's exposure to Nvidia stock volatility at 3% to 5%. He said public pensions hold about 2.5% of assets in Nvidia.
The earnings report will show whether Kress stands behind the company's guidance and commitments, and whether customers are paying on time. Thomas framed the question bluntly: "Can the market survive without positive results from Nvidia?"
