Global stock markets faced renewed volatility on Thursday as a spy scandal threatened the position of Nvidia CEO Jensen Huang.
Asian markets suffered overnight falls after reports that Nvidia's board had met to determine the fate of its long-time chief executive and co-founder, sending the company's shares diving nearly 7 per cent in US pre-market trading.
Chinese tech firms using Nvidia chips for AI models also fell heavily in Hong Kong. Alibaba and Tencent tumbled 6.7 per cent and 2.6 per cent respectively on fears Washington may restrict access to offshore data centres housing advanced processors.
Investors also appear worried about a potential slowdown in the AI industry, with questions over whether major firms like Anthropic and OpenAI can become profitable.
Both companies reported billions in losses last year, with both AI giants currently preparing plans to go public.
A series of reports indicated Nvidia's board met late on Wednesday to consider ousting Mr Huang following allegations of an affair with a suspected spy for China.
The New York Times also reported that Mr Huang had an affair with a fellow Nvidia executive.
"It looks bad from every single angle," said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.
"I believe the board won't oust him until they have an all-star, a known entity in the tech sector, to replace him," he said. "At the end of the day, let's not forget that the Nvidia chip is the centrepiece of the AI story."
It remains unclear who might replace Mr Huang as CEO if he departs. In the meantime, Chinese domestic GPU makers surged on Thursday on expectations that Nvidia's troubles could help local chip suppliers win greater market share.
Saxo Bank's Chief Investment Strategist Charu Chanana said Nvidia earnings next Tuesday mark the next key test.
"Strong results could reaffirm the AI growth story, but may not fully remove the governance discount," she said.
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