Nvidia‘s stock rose in premarket Wednesday after falling for two days amid the scandal rocking the world’s most valuable technology company.
Shares closed 5.47% lower on Tuesday as more details emerged about the fallout from CEO Jensen Huang’s affair with a suspected Chinese spy. It fell 4.3% on Monday.
As of 5:47 a.m. ET, the stock was up 5.3% in premarket trading.
Nvidia stock price over the past 5 days.
Nvidia announced Tuesday that it has hired the law firm Wachtell, Lipton, Rosen & Katz to investigate whether trade secrets or national security were violated.
A person familiar with the matter told CNBC that when Huang returned to the office on Monday, he attempted to carry out “business as usual.” The CEO was in the office on Tuesday for a meeting ahead of the company’s quarterly results on Nov. 17.
Investors are assessing whether this issue will have a negative impact on the business.
Bank of America said in a note Tuesday that there are three scenarios with different investment outcomes. In some scenarios, continuity of leadership dampens the impact, while in others, lingering uncertainty weighs on valuations ahead of earnings.
Vivek Arya, a research analyst at BofA, said in a note that the final scenario would have a broader impact, including “adverse findings, leadership disruption, and increased regulation that would require a reassessment of earnings.”
Zacks’ Chief Equity Strategist John Blank said the selloff reflected two concerns: that the US might impose further restrictions in the wake of the affair and that further problems might arise as the news develops. “What else did Jensen do?” he said.
“This is not good for Nvidia. It’s not good for Jensen fans. It’s certainly not good for the AI industry,” Blank said Wednesday on CNBC’s “Squawk Box Europe.”
Morgan Stanley on Wednesday removed Nvidia from its top picks after the company’s stock price has fallen more than 25% since it went public on Oct. 2. Analysts said in a note Wednesday that Hwang’s leadership is “critical” to the company’s strategic direction.
—CNBC’s Michael Bloom contributed to this report.
