The numbers

Nvidia's board said on Nov 8 that it would open an independent investigation into allegations concerning CEO Jensen Huang's personal affairs. The move has put Huang's future at the center of market attention.

On Nov 9 local time, Nvidia shares closed down 4.27% at $178.67, cutting about $193 billion (roughly 1.29 trillion yuan) from its market value. Five minutes after the US market close, Nvidia and Huang were hit with a shareholder class action accusing them of defrauding shareholders.

Nvidia stock was already under pressure before the latest shock. Worries about valuations across the AI sector have been building, and with AI stocks broadly sold off, Nvidia has fallen nearly 20% over the past month. The Nov 9 drop deepened investor anxiety.

What it means

The shareholder class action was filed swiftly after the close, accusing Nvidia and Huang of defrauding shareholders. Details of the suit have not been disclosed, but the move adds fresh uncertainty to an already volatile share price.

Huang, 63, is the central pillar of Nvidia. FactSet data shows he is the company's fifth-largest shareholder, with a stake of about 3.58%. Analysts say Nvidia would face a huge succession problem if Huang were to leave.

Analysts say the company has no mature succession plan, and that Huang's departure would mean a large-scale leadership change for which the company is not prepared.

The Financial Times reported that Nvidia's boardroom crisis raises questions about the future of a company that has become the bank of AI. Nvidia plays a key role in the AI supply chain, and the stability of its leadership matters for the global AI industry.

The affair has not only wiped more than a trillion yuan off Nvidia's market value in a single day but could also spill over to the global AI supply chain and investor sentiment. Markets worry that if the question of Huang's future drags on, Nvidia's strategic continuity and business development could face challenges.

What to watch

  • Progress and conclusions of the independent investigation;
  • The specific claims and legal proceedings in the shareholder class action;
  • Whether Huang stays and how the company develops a succession plan.

Together, these factors will determine whether Nvidia can steady market confidence.