Monday delivered one of the strangest days in the semiconductor sector this year. Nearly every major chip stock rallied hard, while the industry’s biggest name, Nvidia, moved sharply in the opposite direction.
Nvidia’s board opens an investigation
Nvidia’s board said it would investigate CEO Jensen Huang’s relationship with a woman whom U.S. intelligence officials reportedly believe may be working for China, according to Yahoo Finance. The review is being led by a committee of independent directors working with outside counsel, Stock Titan reported. The company said it continues to have confidence in Huang and has no reason to believe company secrets or national security were compromised, according to Stock Titan and Stocktwits.
Investors still sold first. Nvidia shares fell as much as about 5.8% early in the session before closing down 4.27% at $178.67, Yahoo Finance reported. That decline erased roughly $190 billion of market value, according to Stock Titan. The stock was down more than 3% again Tuesday morning, as lawmakers on Capitol Hill called for more answers, according to TheStreet and Yahoo Finance.
Dan Ives of Yorkville summed up the concern in one line quoted by Yahoo Finance: “Jensen is not replaceable.” Analysts have described the episode as a key person risk for a company closely identified with its founder.
Rivals take the spotlight
The rest of the group moved the other way. According to Yahoo Finance and Stocktwits:
- AMD jumped about 13% to $508.58, its best session in six months, after Oppenheimer upgraded the stock to outperform, citing strength in its server CPU and data center business.
- Broadcom gained about 8% to 9%.
- Micron, ASML and Arm each rose roughly 6%, while Intel added about 5% and TSMC nearly 4%.
Bank of America described the Nvidia situation as a new overhang rather than an earnings event, and said AMD, Broadcom and Marvell could be among the beneficiaries, according to Stocktwits.
Why the split matters
For much of the AI boom, chip stocks have tended to rise and fall together, with Nvidia setting the tone. Monday showed that investors are willing to separate company specific risk from the broader demand story for AI hardware, which still looks strong based on recent results and guidance across the sector.
The next test arrives quickly. Nvidia is scheduled to report quarterly results on November 17, and investors will be listening closely for any update on the board’s review, in addition to data center demand and China exposure. Before that, Applied Materials reports on Thursday, offering a read on chip equipment spending.
Tuesday’s hotter than expected inflation report added another layer of pressure on high valuation tech names, as rising Treasury yields tend to weigh on growth stocks.
