Global equity markets associated with artificial intelligence experienced a sharp decline on Thursday, November 12, 2026. The sell-off was triggered by the resignation of Nvidia CEO Jensen Huang, a move that follows a deepening scandal involving his personal affairs. This leadership change introduces new uncertainties for the chipmaker and poses significant risks to a broader sector already grappling with concerns regarding funding structures and regulatory pressures.
Nvidia announced that Chief Financial Officer Colette Kress will assume the role of interim CEO while the company searches for a permanent replacement. The transition comes at a critical time for the firm, which serves as the central hub of the current AI ecosystem. Nvidia has historically financed much of the infrastructure built around its own chips, a strategy that has attracted scrutiny for its circular nature. With the internal crisis intensifying, investors are now concerned about how this dynamic may weigh on the entire sector.
The decline in AI stocks is part of a larger trend that began after Democratic candidates swept the recent midterm elections. This political shift occurred in states that are often opposed to the construction of new data centers, fueling fears that tighter regulations could slow the pace of AI infrastructure development. Amidst these macroeconomic headwinds, the news of Huang's departure sent Nvidia shares down by 10.3% during premarket trading. The drop placed the company's market value on a trajectory to fall below the $4 trillion mark for the first time since July 2025, as reports indicated the board was deliberating whether to formally oust the CEO.
The turmoil at the industry leader had a ripple effect on Nvidia-backed neocloud companies. CoreWeave, which had surged more than 27% in the previous session following an earnings report that sparked a relief rally, reversed course and dropped 13.6% on Thursday. Other neocloud stocks, including IREN and Applied Digital, also traded lower. Nebius saw a steeper decline of 20% after the company stated that its 2026 revenue would land at the low end of its previously issued forecast.
Since the board announced an investigation into Huang's relationship with a businesswoman named Alice Huang, who is alleged to be a Chinese spy, Nvidia has lost approximately $300 billion in market value. Jun Bei Liu, lead portfolio manager at Ten Cap, noted the strategic impact of the leadership change. He stated that Huang has been the face of Nvidia and that the company has been front and center in the AI build-out. Liu added that because Nvidia has sponsored many new cloud data center businesses through circular financing, the situation has meaningful ramifications for the future of the sector.
Broader tech stocks also faced downward pressure. Memory chipmaker Micron Technology fell 5.8%, while data storage firms Sandisk and Western Digital dropped 8.5% and 5.2%, respectively. Photonic product manufacturers Lumentum and Coherent, along with AI server maker Dell, each eased by around 7%. Other chip-related companies, including Marvell Technology, Intel, Arm Holdings, and Texas Instruments, dipped between 4.5% and 6.3%.
In a notable divergence, shares of competitors AMD and Broadcom rose by 2% and 1.4%, respectively. Investors appear to expect that the turmoil at Nvidia could create opportunities for rival chipmakers. The jitters extended to international markets, with Japan and South Korea closing nearly 0.7% lower. Tech stocks in Europe were also down by about 1%.
Data from analytics firm ORTEX indicates that Nvidia short sellers have secured approximately $3.8 billion in paper profits as of the last close. With the share price falling to $163, those potential gains could swell to about $6.8 billion. According to LSEG data, Nvidia currently trades at about 12 times its 12-month forward earnings estimates, marking its lowest valuation since November 2012.
