Nvidia Investors turned bearish ahead of this week’s Jensen fan scandal. But the selloff on Wall Street has accelerated in recent days, with stocks headed for a sixth straight week of declines and the longest losing streak since 2012.
The semiconductor giant, which spent much of the year as the world’s most valuable company, had lost 29% of its value in that period as of Thursday’s close. This equates to a decrease in market capitalization of approximately $1.6 trillion, which is less than that. apple In the process.
Huang, who co-founded Nvidia and led the company for 33 years, resigned on Thursday after two separate affairs were made public, one with a suspected Chinese spy and the other with an employee. The board has appointed Finance Director Colette Kress as interim CEO while it searches for a full-time replacement.
Nvidia stock fell 4.3% on Thursday, taking its loss for the week to 11%. News of the affair first broke on the front pages over the weekend, with Mr. Hwang sending a letter to his employees apologizing for his “unfaithfulness to my wife.” The board convened late Wednesday after the New York Times reported on another incident, one with the company’s vice president of health care.
By early Thursday morning, Mr. Huang was out, capping a stunning decline for the Nvidia co-founder who had emerged as one of President Donald Trump’s biggest allies in the business world.
“With CEO Jensen Huang’s unfortunate departure, NVIDIA expects a difficult transition in the coming months,” DA Davidson analyst Gil Luria said in a report Thursday. Luria lowered his price target from $300 to $200, but maintained a buy rating. “We believe the market has adjusted appropriately for this transition,” he said.
Nvidia stock fell about 9% last week before Hwang’s departure. Much of the decline occurred after the midterm elections, in which Democrats won by a landslide and passed dozens of ballot measures that could slow the buildout of artificial intelligence.
In the weeks before the election, Nvidia’s stock price, along with the rest of the AI industry, had fallen on concerns that rising interest rates would hurt debt-laden companies. Nvidia makes huge profits, but large customers like Neocloud rely on the bond market.
The pressure is on for Cress heading into next week. Nvidia is scheduled to report quarterly results on Tuesday. Analysts expect sales to rise 91% year over year to $108.9 billion, according to LSEG. This is an 18x increase compared to the same quarter in 2022, just before OpenAI announced ChatGPT and began the generative AI era.
Oppenheimer analysts said in a note Thursday that while the company reported strong earnings, “we expect fundamentals to take a backseat in the near term.”
“In our view, Mr. Hwang’s departure could result in a prolonged stock price overhang,” they wrote.
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