Nvidia shares dip after CEO scandal amid ongoing AI demand

Nvidia's shares closed 4.3% lower on Nov 9 after the company announced a probe into a lawsuit alleging that CEO Jensen Huang had an affair with an alleged Chinese spy. The drop reduced the chipmaker's market value by about US$190 billion, adding to market uncertainty after a recent tech sell-off.

Analysts cited to The Straits Times said the company's core business remains robust. AI demand continues to grow, with major cloud providers planning higher capital-expenditure on semiconductor chips over the next two years, and the firm's CUDA platform keeping customers dependent on Nvidia hardware. > "AI demand remains high and growing, with hyperscalers planning to increase capital expenditure spending on semiconductor chips over the next two years," said Chong Yik Ban, research analyst at Phillip Securities Research.

Investors are advised to monitor Nvidia's upcoming quarterly sales and forward guidance, which are expected to show revenue of about US$108 billion for the third quarter of its 2027 fiscal year, roughly 12% above the prior quarter. Ng Hui Min, senior investment analyst at Beansprout, warned that weaker guidance could raise concerns, while stronger results would support confidence in AI infrastructure demand.

Potential policy shifts in the United States could affect future chip orders. Democrats now control both chambers of Congress after the Nov 3 mid-term elections, and opposition to new data-centre projects may delay spending, according to Goldman Sachs estimates. However, about 75% of new data-centre capacity slated for 2027 is already under construction, and underlying demand remains solid.

The possibility of Huang stepping down adds another risk factor. Kenneth Goh, director of wealth management at UOB Kay Hian, said a successor would need to retain trust with major customers and officials in Washington and Beijing. Charu Chanana, chief investment strategist at Saxo Markets, noted that the company's success is closely tied to Huang, making leadership a potential investment risk.

The board has not indicated any imminent change in leadership, and senior executives such as CFO Colette Kress and VP Ian Buck are cited as having the depth to maintain continuity. Morningstar senior equity analyst Brian Colello warned that Huang's departure could lead to reduced AI dealmaking and increased regulatory scrutiny.