Nvidia turmoil and new China chip curbs trigger AI stocks selloff, raising AI demand worries

Nvidia Leadership Crisis Triggers Market Selloff

Nvidia shares plunged 7% in premarket trading on Thursday after reports emerged that the board was considering the potential departure of CEO Jensen Huang1

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. The uncertainty stems from reports involving two extramarital affairs by the longtime leader, including allegations of a relationship with a businesswoman suspected of being a Chinese spy2

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. The selloff extended beyond Nvidia, with Nasdaq 100 futures dropping 0.79% and chipmakers Intel, Marvell Technology, and Micron falling between 2.6% and 3.4%1

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. AI infrastructure firms CoreWeave and Nebius dropped 7.2% and 4.7% respectively, threatening to erase Wednesday's gains1

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Nvidia's central role in the AI boom has tied much of the industry's fortunes to the chipmaker, leaving investors wary of potential fallout from any leadership change. "The controversy creates an unusually difficult problem for investors, who have spent years concentrating capital in companies considered indispensable to the AI economy," said Terri-Leigh Bennett, chief operating officer at CMS Prime1

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. The stock closed at $168.89 on November 10, sitting about 31% below its 52-week high of $243.37 and just above its 52-week low of $164.273

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Financial Commitments and AI Infrastructure at Risk

Investors fear that a possible departure of Jensen Huang could weaken Nvidia's commitment to financing the AI infrastructure buildout. The company disclosed approximately $164.5 billion in financial commitments in its latest earnings report2

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. These include an obligation capped at $105 billion linked to an OpenAI data center project in Ohio, alongside more than $50 billion in lease and other capacity guarantees2

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. Beyond supplying GPU technology, Nvidia has emerged as a major financier of the AI industry, investing billions through equity stakes, infrastructure partnerships and other financial commitments2

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Huang co-founded Nvidia more than three decades ago and transformed it into a roughly $4 trillion company, making it the world's leading supplier of AI chips2

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. The company has never publicly identified a successor, though analysts point to senior engineer Ian Buck and Chief Financial Officer Colette Kress as potential internal candidates2

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. "People often say Nvidia is Jensen Huang and Jensen Huang is Nvidia," noted an industry official5

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Congress Advances Three Bills Targeting China Chip Exports

As the Nvidia leadership crisis unfolds, Congress is moving forward with three measures now part of the Senate's fiscal 2027 National Defense Authorization Act package3

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. The AI Overwatch Act would give Congress greater authority over advanced chip exports, potentially limiting the executive branch's ability to approve sales to foreign adversaries3

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. The Chip Security Act would require companies to track advanced chips, making it harder for restricted processors to reach China through intermediaries and unauthorized channels3

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. The MATCH Act would pressure U.S. allies, including countries central to semiconductor manufacturing, to restrict exports of chipmaking equipment to China3

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Senate Democratic Leader Chuck Schumer called on Congress to pass the legislation, stating the situation "makes clear that Congress must now act to pass critical bipartisan legislation like the AI Overwatch Act, the MATCH Act and Chip Security Act to cut off China's access to advanced American technology"5

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. The measures have advanced through the House Foreign Affairs Committee and signal that the push for tighter US chip export restrictions to China has gained bipartisan traction3

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Trump's Position and H200 Shipment Challenges

President Donald Trump faces a choice between protecting U.S. national security and preserving a lucrative market for American chipmakers3

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. Trump has previously favored allowing controlled sales of advanced American chips to China, arguing that keeping U.S. companies commercially competitive can help preserve their technological leadership3

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. In December 2025, Trump announced that Nvidia's H200 chips could be sold to approved Chinese customers under certain conditions, with the Commerce Department moving to review export applications on a case-by-case basis3

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However, regulatory approval has not translated into meaningful recovery. Nvidia disclosed that H200 shipments accounted for less than 1% of its most recent quarterly data center revenue3

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. The company also recorded a $400 million charge related to excess H200 inventory and purchase obligations during the first half of fiscal 20273

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. Adding to complications, approximately 600,000 H200 chips were sitting in Hong Kong awaiting approval for shipment into mainland China as of November 53

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Analyst Downgrades Reflect Growing Concerns

Baird downgraded Nvidia to "Neutral" from "Buy" and slashed its price target to $200 from $500, citing growing risks from semiconductor export controls and a potential slowdown in AI spending4

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. The brokerage noted that AI hyperscaler capex growth could slow to about 40% year-on-year in 2027, bogged down by supply constraints and early signs of demand softening4

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. Baird added that demand from Southeast Asian data center operators and China is crucial for the chip company, and any pre-emptive or US government restrictions on exports could weigh on revenues4

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Morgan Stanley removed Nvidia from its top pick list after the stock fell more than 25% since being named a top pick a month ago4

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. BofA Global Research also removed Nvidia from its US 1 List, and at least three other brokerages, including Wells Fargo and Citigroup, reduced their price targets4

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. On the leadership front, Baird stated, "The odds of CEO transition are increasing into 2027. We think the odds favor an outsider being hired as CEO versus someone promoted from within"4

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Impact on Korean Semiconductor Supply Chain

The mounting uncertainties surrounding Nvidia are threatening to disrupt Korea's semiconductor industry and its broader AI road maps5

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. Of particular concern for Samsung Electronics and SK hynix is the MATCH Act, which seeks to align U.S. allies' export controls with Washington's restrictions on semiconductor manufacturing equipment supplied to China5

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. If enacted, the Korean government could face pressure from Washington to introduce restrictions on exports of designated semiconductor manufacturing equipment to China5

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Samsung Electronics' NAND flash memory plant in Xi'an and SK hynix's DRAM plant in Wuxi and NAND flash memory plant in Dalian could qualify for exemptions under the bill's draft5

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. However, the clause refers only to "exports," leaving unclear whether it covers servicing existing equipment, such as repairs, calibration and software or firmware updates5

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. Huang visited Korea twice since 2025, meeting with President Lee Jae Myung and the owners of major Korean conglomerates, with Nvidia pledging to prioritize the supply of 260,000 of its latest graphics processing units to the Korean government and major companies5

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Market Volatility and Investor Sentiment

The sharp swings in AI stocks underscore a tug of war over the AI trade, with concerns about a slowdown in data center development intensifying following Democrats' midterm election gains1

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. However, some investors see the recent pullback as a buying opportunity. "It's a great time to be an AI company. You definitely have a lot of contagion that happens with retail investors and algorithmic trading, but we don't see capital expenditure on AI slowing down," said Strategy Asset Managers CEO Tom Hulick1

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. Chinese semiconductor stocks rose on Thursday, with leading GPU makers Moore Threads, MetaX and Cambricon rising nearly 10% on expectations that domestic suppliers could gain market share2

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. Watch for Nvidia's third-quarter results after markets close on November 17 and final NDAA language for signals on how geopolitical shifts and market volatility will shape the AI chips landscape.