Nvidia Shares Down More Than 23% in a Month as Huang Probe Adds to the Slide
Nvidia shares have fallen more than 23 percent in a month. The stock closed at $186.64 on Friday, down from an intraday high of $243.37 in early October, and traded at $176.74 in regular trading on Monday, down 5.30 percent from Friday’s close.
The decline began in October. After reaching the intraday high of $243.37 on Oct. 6, the stock slid for a month, then plunged 9.26 percent on Thursday, Nov. 5, to close at $181.60. It rebounded 2.78 percent on Friday, but the drop from the high still exceeds 23 percent.
Last week’s fall was not about Nvidia alone. Worries about an AI bubble, stretched semiconductor valuations and the enormous sums being borrowed to build data centers had been growing. The Democrats’ midterm victories added fears of tighter regulation of data centers. The PHLX Semiconductor Index, known as SOXX, fell 12.2 percent on Thursday, its worst day in more than six years.
Monday’s fall is different. Overnight, AMD rose 1.7 percent and Intel rose 1.2 percent, and SOXX gained 0.6 percent, while Nvidia alone fell. News of the investigation into chief executive Jensen Huang has become a burden specific to Nvidia.
Nvidia’s board said on Sunday it had opened an independent investigation into whether Huang was the target of a foreign intelligence effort. The New York Times reported last month that Huang had a close relationship with Alice Huang, a former executive of Singapore-based Megaspeed whom United States authorities concluded was a Chinese intelligence asset. Megaspeed, a Nvidia customer, bought $4.8 billion worth of Nvidia chips over the last two years. No one has been charged, and the board said it had no reason to believe that secrets were compromised.
The dates that will decide the stock’s direction are set. The biggest is the earnings report on Nov. 17. The market expects earnings per share of $2.47 and revenue of $108.8 billion. If orders from cloud customers hold up and margins stay healthy, sentiment could turn around quickly.
On Nov. 18, Huang is due to appear for a closed-door briefing requested by the Republican chairmen of three House committees. If the investigation produces evidence that confidential information was compromised, or raises the likelihood of a leadership change, the stock could fall again.
Wall Street analysts’ average price target is $322.50, about 73 percent above Friday’s close. Some are cutting their targets, though. Melius Research lowered its target to $315 from $420 last week.
Nvidia was valued at about $4.5 trillion as of Nov. 6, making it one of the world’s most valuable companies. Its 52-week range is $164.27 to $243.37. Monday’s price is as of 11:52 a.m. Eastern time.
