On November 12, Nvidia, the leading giant in artificial intelligence (AI) chips, made a startling announcement that its founder, Jensen Huang, had stepped down from his position as chief executive officer. This news sent shockwaves through the market, leading to a staggering drop of 14% in the company’s stock price at the opening. However, what followed was nothing short of a trading frenzy, as American retail investors swooped in to capitalize on the plummeting stock. Within just 30 minutes of trading, they had collectively purchased a remarkable $111 million worth of Nvidia shares, setting a historical record for net buying in such a brief timeframe.
According to reports from Reuters, data from investment research firm Vanda Research indicated that during the first 30 minutes of trading on Thursday, retail investors’ net buying of Nvidia stock reached an unprecedented high level for that timeframe, as recorded by the firm. Following the initial plunge, Nvidia’s stock managed to rebound slightly, with the closing drop narrowing to 4.34%.
The day before Huang’s resignation, reports surfaced suggesting that he had been involved in an extramarital affair with a company executive who reported directly to him. This scandal was compounded by his prior association with a woman suspected of engaging in espionage activities on behalf of the Chinese Communist Party, both factors contributing to the downward pressure on Nvidia’s stock.
Over the past five weeks, Nvidia’s share price has plummeted nearly one-third, resulting in a staggering market value loss exceeding $1 trillion. This prolonged decline has raised various concerns among investors and analysts alike.
Data from Fidelity Investments revealed that by noon Eastern Time on Thursday, the platform’s customers had submitted an astounding 394,818 buy orders for Nvidia stock, contrasting sharply with just 80,088 sell orders. This amounted to more than double the total number of buy orders for the next nine most actively traded stocks on the platform. In stark comparison, Advanced Micro Devices (AMD), which held the second position, received only 24,790 buy orders.
Despite the enthusiasm from retail investors, sentiment around Nvidia’s future was not universally optimistic. On the popular investment discussion platform Reddit, specifically the WallStreetBets forum, approximately 60% of comments related to Nvidia expressed negative sentiment regarding the stock’s outlook.
In addition to the uncertainty introduced by Huang’s departure, there is growing apprehension on Wall Street regarding the overall growth prospects of the AI industry. On Wednesday, Baird Equity Research downgraded Nvidia’s stock rating to neutral, drastically slashing the target price by 60% to $200 per share. Nonetheless, this revised target price still exceeds Nvidia’s stock value of around $164 at Thursday’s afternoon trading session.
Senior analyst Tristan Gerra highlighted that ongoing supply issues and potentially slowing demand could complicate the outlook for the data center market heading into 2027. He noted that the rate of capital expenditure by major cloud service providers in the AI sector might fall to 40% or lower next year, reflecting a cautious approach as market dynamics shift.
In light of these developments, investors are particularly keen to monitor Nvidia’s upcoming quarterly earnings report, set to be released on November 17, as well as the anticipated initial public offering (IPO) of AI firm Anthropic later next week. These two significant events are expected to provide fresh insights into the growth trajectory of the AI industry, shaping market expectations and investor sentiment in the months ahead.