Microsoft reclaimed its position as the world's second-most valuable company on Tuesday, overtaking Nvidia after a sharp sell-off in the chipmaker's shares, as investor concerns over the prospects for artificial intelligence were compounded by reports of a possible foreign intelligence operation targeting chief executive Jensen Huang.
Nvidia shares tumbled more than 6 per cent to about $167.11, while Microsoft slipped 0.4 per cent to $543.25. The AI chipmaker shed more than $470 billion in market value over two sessions as concerns mounted over the fallout from CEO Jensen Huang's affair with Chinese businesswoman Alice Huang alleged to be a spy for Beijing.
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Nvidia's valuation consequently fell to about $4.02 trillion, narrowly trailing Microsoft's market capitalisation of more than $4.03 trillion.
The shift marks a reversal in the companies' recent market positions, with Nvidia losing ground after a prolonged rally fuelled by strong demand for its AI chips. The CEO's relationship with Alice Huang helped facilitate shipments of at least $7.5 billion worth of Nvidia chips to Chinese firms, as per reports.
Microsoft, meanwhile, has benefited from investor confidence in its expanding artificial intelligence business and its integration of AI tools across its software and cloud services.
The latest pressure on Nvidia comes at a time when investors are reassessing the sustainability of the massive spending on AI infrastructure and the returns that technology companies can expect from their investments.
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Questions over the pace of future AI adoption have also weighed on sentiment towards companies closely linked to the sector.
Adding to the uncertainty, reports of an investigation into whether Huang was the target of a foreign intelligence effort have drawn attention to the chipmaker's leadership and geopolitical exposure.
The divergence in share performance has been particularly pronounced over the past month.
Microsoft shares have gained approximately 1.89%, while Nvidia has shed around 23.53%, reflecting a sharp shift in investor sentiment towards the two technology giants.
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