Nvidia bucked a broader tech rebound on Monday as investors weighed the fallout from the controversy surrounding CEO Jensen Huang. But analysts say the chipmaker's underlying business remains strong.
A photo shows NVIDIA CEO Jensen Huang with a woman confirmed by a Reuters source to be Alice Huang in Taipei, Taiwan released on Jun 7, 2024. (Image: Obtained by Reuters)
A photo shows NVIDIA CEO Jensen Huang with a woman confirmed by a Reuters source to be Alice Huang in Taipei, Taiwan released on Jun 7, 2024. (Image: Obtained by Reuters)
SINGAPORE: US technology stocks rebounded on Monday (Nov 9), with the rally extending to Asia on Tuesday after last week's sell-off over AI spending, valuations and uncertainty following the US midterm elections.
The Nasdaq Composite closed 2.7 per cent higher, its best day in over four months, while the Philadelphia Semiconductor Index, which contains 30 of the largest semiconductor companies in the US, shot up about 7 per cent after plunging more than 12 per cent last week.
The chipmaker was the only stock in the semiconductor index to decline, with its shares closing 4.3 per cent lower after falling nearly 9 per cent earlier in the session. The drop wiped about US$190 billion off its market value.
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The decline came as Nvidia co-founder and CEO Jensen Huang admitted to having an affair with a Chinese executive Alice Huang, alleged to be a spy for Beijing.
Nvidia's board on Sunday announced it has launched an independent investigation to probe whether Huang had been "the target of a foreign intelligence effort".
A screengrab from CTI video footage obtained Nov 9, 2026 shows a woman identified by Reuters as Alice Huang after comparison with a photograph obtained separately, attending a dinner with Nvidia CEO Jensen Huang (in black) at a restaurant in Taipei, Taiwan on May 22, 2025. (Photo: Reuters/CTI)
A screengrab from CTI video footage obtained Nov 9, 2026 shows a woman identified by Reuters as Alice Huang after comparison with a photograph obtained separately, attending a dinner with Nvidia CEO Jensen Huang (in black) at a restaurant in Taipei, Taiwan on May 22, 2025. (Photo: Reuters/CTI)
WHY DID NVIDIA MISS THE TECH REBOUND?
Chong Yik Ban, senior research analyst at Phillip Securities Research, described Monday's rebound as a "relief rally" following four consecutive weeks of declines in the Nasdaq.
The recovery was also supported by easing geopolitical tensions and lower oil prices, which helped reduce inflation expectations, said Kelvin Wong, senior market analyst at online trading platform OANDA.
He pointed to US President Donald Trump's comments that further military strikes on Iran were unnecessary following talks in Qatar.
Nvidia's underperformance, however, reflected company-specific concerns, Wong said.
Chong similarly attributed Nvidia's decline to the controversy surrounding Huang, which emerged over the weekend.
"NVIDIA's heavy dependence on CEO Jensen poses a significant key-person risk that could make investors cautious," he told CNA.
Briefing.com analyst Patrick O'Hare said investors were penalising Nvidia for the uncertainty surrounding Huang, but did not appear to expect wider consequences for the technology sector.
"The stock is being penalised for Jensen Huang's personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn't caught up in the notion that this situation is going to have a systemic domino effect," he told AFP.
The broader rally was also driven by short sellers covering their positions, bargain hunting and momentum trading, according to Adam Sarhan, chief executive of New York-based 50 Park Investments.
"We have seen a very steep and exaggerated selloff in the market," Sarhan told Reuters.
"Whenever the market gets that stretched to the downside, history has shown us usually it's a good buying opportunity in the short term."