Nvidia shares, a number one holding in the Allianz, Manchester & London and Polar Capital investment trusts, plunged 13% this afternoon after the resignation of chief executive Jensen Huang.
Huang’s position had already looked vulnerable on Monday after the revelation that he had an affair with a woman who US intelligence believed was a Chinese spy.
A report in the New York Times that he had a second affair with an executive at his own company, Kimberly Powell, Nvidia’s vice-president of healthcare, looks to have been the last straw.
In a statement the company thanked Huang for “immeasurable contributions” to the chip maker he founded 33 years ago and successfully steered from the gaming sector to global dominance as the leading supplier for the artificial intelligence revolution.
It has appointed chief financial officer Colette Kress as interim chief executive while a permanent successor is found and announced its first board chairman, former executive chair of Synopsys.
Kress joined Nvidia in 2013 and had helped lead the company through a period of extraordinary growth, said Jones, who stated the board’s full confidence that the company’s “operations, customer commitments and product roadmap to continue without interruption”.
The stock market feared the worst, however, with the shares initially slumping 13.4%, before recovering to trade around 6% lower. They have slid 12.5% since Monday after Huang apologised to his wife, family and colleagues for his affair with Alice Huang.
Huang, who is not related to Jensen, is a former executive with Megaspeed, a Singapore-based firm which is said to have bought around $2bn of Nvidia products over the past few years, many of them believed sent on to China in circumvention of US export restrictions.
The stock had already come under pressure as investors questioned the sustainability of AI spending that had propelled Nvidia to become the second most valuable company in the world, worth $4trn behind Apple on $5.2trn. From an all-time high of $239 on 6 October, the shares have lost a third of their value but are still up 442% over five years.
Manchester & London (MNL), a £314m technology investment trust that held 12.9% of its assets in Nvidia, its top position at 31 October, fell 2.8% today and has tumbled 22.5% since 5 October. Before today it had returned 101% to shareholders over three years.
Polar Capital Technology (PCT), the £6.5bn sector giant run by Polar Capital’s Ben Rogoff, which had a top 10% weighting to Nvidia at the end of September, was off just 0.5% at 587p this afternoon but has shed nearly 19% since 6 October. It is the tech trust sector’s best performer with a 152% total return over three years and 122% over five years.
Allianz Technology Trust (ATT), a £2bn trust run by Mike Seidenberg at Allianz Global Investors, had 9.5% in Nvidia at 30 September. It also eased 0.8% to 653p today but has shed 17% since early October. It has returned 140% over three years.
While the Nasdaq Composite index has fallen 7.6% since its 6 October high, it has risen 2.6% in the past five sessions. Some investors have looked to buy tech stocks on lows, while Nvidia’s problems have bolstered demand for rivals. For example, Advanced Micro Devices (AMD) has risen 6.3% today and has rallied over 24% in the past five sessions valuing it at $962bn.
