Nvidia shares are heading towards their longest weekly losing streak in more than a decade, with the chipmaker's market capitalisation shrinking by nearly $1.6 trillion amid mounting investor concerns over its leadership transition and the broader artificial intelligence trade.
The stock is on track to register its sixth consecutive weekly decline, which would mark its longest losing run since 2012. Nvidia has shed around 29% of its market value during this stretch, based on Thursday's closing price, losing its position as the world's most valuable company to Apple in the process.
Selling pressure intensified this week, with Nvidia shares falling 4.34% on Thursday to close at $166.19 on the Nasdaq. The decline took the stock's weekly losses to approximately 11%. However, the shares showed signs of a recovery in pre-market trading on Friday, rising 2.24%, or $3.72, to $169.91.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The latest sell-off comes amid a dramatic leadership shake-up at the company. Co-founder Jensen Huang stepped down as CEO on Thursday following reports about two extramarital relationships, one involving an employee and another with an alleged Chinese spy. The company's board appointed Chief Financial Officer Colette Kress as interim CEO while it searches for a permanent successor.
Huang's departure has added another layer of uncertainty for investors already cautious about the artificial intelligence sector. News of the first reported affair emerged over the weekend, followed by a report about the second relationship involving the company's vice president of healthcare. Huang had also issued an apology to employees, acknowledging that he had been unfaithful to his wife.
D.A. Davidson analyst Gil Luria said Nvidia could face a challenging transition over the coming months following Huang's exit. Luria lowered his price target on the stock to $200 from $300, while retaining a buy recommendation. He added that the market had appropriately adjusted for the leadership change.
However, the pressure on Nvidia predates the latest developments. Its shares had already fallen around 9% last week, with investors reassessing the AI trade following the US midterm elections and concerns that rising interest rates could weigh on companies dependent on debt financing to fund their expansion.
Attention is now shifting to Nvidia's quarterly earnings, scheduled for Tuesday. Analysts surveyed by LSEG expect revenue to grow 91% year-on-year to $108.9 billion, highlighting the scale of demand generated by the AI boom.
ALSO READ: 1,600 Nvidia Employees Rally Behind Jensen Huang, Demand Boss' Return After Exit Over Affair
Oppenheimer analysts expect Nvidia to deliver solid results but cautioned that near-term market sentiment could overshadow its financial performance. They also warned that Huang's departure could continue to weigh on the stock.
For investors, the upcoming earnings announcement will be an important test of whether Nvidia's strong business fundamentals can offset concerns surrounding its leadership and the wider AI investment cycle.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
