Nvidia shares fell 7.8% on Thursday as the company faces a dual crisis involving leadership instability and broader regulatory concerns.
The stock’s market capitalization is at risk of dropping below $4 trillion for the first time since July 2025.
The decline follows reports that the company’s board of directors is deliberating whether to remove the chief executive officer. This development comes after news broke over the weekend regarding an affair involving Jensen Huang and an alleged Chinese “honeypot” spy, as reported by Investor’s Business Daily. Nvidia subsequently announced that Jensen Huang has stepped down from his positions as president and chief executive officer with immediate effect.
Since the news emerged, three Wall Street analysts have lowered their price targets for Nvidia, while one firm downgraded the stock from buy to neutral.
Additional downward pressure on the sector stems from recent political outcomes, as Democrats secured decisive wins in midterm elections, including in states that oppose the construction of new data centers. This outcome heightens market anxieties that stricter regulatory oversight could impede the expansion of AI infrastructure.
Other companies linked to the AI ecosystem also saw their share prices decline on Thursday. CoreWeave, a neocloud provider supported by Nvidia, fell 6% following a jump of over 27% in the previous session when its financial figures triggered a relief rally across AI shares. Shares of other neocloud providers, including IREN and Applied Digital, likewise traded lower.
The broader chip sector experienced a downturn as well.
AMD and Broadcom shares rose 1.7% and 0.8% respectively, amid expectations that the turmoil at Nvidia could create commercial opportunities for rival chip manufacturers.
Earlier coverage: Nvidia Shares Drop 8% Following Reports Board May Oust Jensen Huang
