A massive shock hit Wall Street on Monday, 9 November, as tech heavyweight Nvidia saw its stock drop nearly 7.5% right at the opening bell. The stock dropped by $13.89 per share, sliding from Friday's close of $186.64 down to $172.75.

With roughly 24.15 billion shares outstanding, this massive price drop erased an estimated $335 billion in market capitalisation. Analysts note it marks one of the biggest single-session valuation losses for the AI chip giant, though it reflects traded equity value rather than a direct cash loss.

Board launches probe into CEO

The sudden market panic came after Nvidia's board announced on Sunday that it is launching an independent probe. The inquiry looks into reports about Huang's relationship with a Chinese business executive whom US intelligence officials suspect of gathering intelligence for Beijing.

Huang admitted he had been unfaithful to his wife. He apologised to his family and co-workers and stated he would cooperate fully with the ongoing inquiry. Independent directors, supported by outside legal advisers, will run the investigation, while the company maintains confidence in Huang.

Links to Singapore firm and chip shipments

Reports have connected the controversy to Alice Huang, a former executive linked to Singapore-based data centre outfit Megaspeed International. That company has separately faced questions over claims regarding advanced Nvidia chips being moved into China.

For now, the espionage claims remain unproven, and China has dismissed reports of any intelligence operation. Nvidia's board also made it clear that there is no present reason to think US national security or proprietary corporate data was put at risk.

Growing jitters for AI sector

The drama lands during an already shaky period for semiconductor and technology stocks, which saw heavy selling just last week. Investors are worried about AI spending levels, high valuations, and possible regulatory pressure following the US midterm elections.

What happens next

Attention will now focus on the findings of Nvidia's independent investigation, any potential regulatory implications, and whether investors regain confidence in the company's leadership.