Nvidia plunges but tech shares rebound, oil prices slump

Technology share prices clawed back some of last week’s sharp losses on Monday, though gains were tempered by a plunge in Nvidia following a probe into its boss Jensen Huang over claims of an affair with an alleged Chinese spy. Oil prices fell five percent on hopes for diplomatic talks aimed at ending the US-Iran war. Chipmakers and other companies linked to the artificial intelligence boom took a hammering in the days after last Tuesday’s US midterm elections, which saw Democrats sweep both chambers of Congress, leading to speculation lawmakers would seek to rein in tech firms.

But Wall Street’s main indices opened higher, with the tech-heavy Nasdaq adding 0.9 percent. Briefing.com analyst Patrick O’Hare said the rebound in equities was due to more than just the drop in oil prices. “What we also have this morning is an inclination to buy into last week’s weakness, and specifically into the large losses seen in the AI trade,” he said in a note to clients.

The Philadelphia Semiconductor Index, which includes major chipmakers and AI firms, rose 1.9 percent. But the gains did not extend to Nvidia, which saw its shares slump more than eight percent as trading got underway in New York. O’Hare said Nvidia was being treated as a one-off story by investors for the moment. “In other words, the stock is being penalized 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 said.

The news that Nvidia’s board would investigate whether Huang had been targeted in a foreign espionage plot, following his admission he was unfaithful to his wife, brought fresh uncertainty in the markets. The New York Times last month reported that US intelligence officials concluded a Chinese executive linked to a Singapore-based data centre company called Megaspeed had been funnelling information to Beijing.

The executive, Alice Huang — also known as Huang Le, and no relation to 63-year-old Taiwanese-born Jensen — developed a close relationship with the Nvidia boss, the Times said. In a message to company employees released to media on Sunday, Huang acknowledged having an affair and apologised to his family and company staff. Nvidia is a global leader in producing chips used to train and run AI models and one of the world’s most valuable companies, and last year became the first to reach a market capitalisation of $5 trillion.

Technology analyst Dan Ives, at the investment bank Yorkville Ives, said the crisis would at the very least spark congressional inquiries and “create an overhang on the stock for a myriad of reasons”. “This will add risk to the stock as he is so important to the Nvidia story and strategy globally,” Ives said. “This will also increase major scrutiny regarding selling chips to China, which remains a key battleground issue in DC,” he added.

China on Monday said the claims that it had spied on Huang were “baseless”. Europe’s main stock markets rose in afternoon trading following gains across much of Asia. The dollar fell against its main rivals. – Key figures at around 1430 GMT – New York – Dow: UP 1.1 percent at 51,858.65 points New York – S&P 500: UP 0.8 percent at 7,438.80 New York – Nasdaq Composite: UP 0.9 percent at 24,792.85 London – FTSE 100: UP 0.7 percent at 10,742.85 Paris – CAC 40: UP 1.1 percent at 8,225.88 Frankfurt – DAX: UP 1.2 percent at 26,134.77 Tokyo – Nikkei 225: UP 2.3 percent at 58,775.50 (close) Seoul – Kospi: DOWN 0.8 percent at 5,018.85 (close) Hong Kong – Hang Seng Index: DOWN 0.1 percent at 24,448.95 (close) Shanghai – Composite: UP 0.3 percent at 3,660.79 (close) Brent North Sea crude: DOWN 5.5 percent at $92.90 per barrel West Texas Intermediate: DOWN 4.9 percent at $86.34 per barrel Euro/dollar: UP at $1.1197 from $1.1138 on Friday Pound/dollar: UP at $1.3416 from $1.3350 Dollar/yen: DOWN at 157.95 from 158.46 yen Euro/pound: UP at 83.44 from 83.43 pence