Nvidia Falls Against Chip Rally as Board Investigates Huang Reports

The divergence matters because Nvidia was already under pressure before the investigation. The earlier report put its loss last week at nearly 9% and its decline from the start-of-October peak at more than 21%, wiping out roughly $1 trillion in market value. A fall of at least 20% from a recent high meets the conventional bear-market threshold.

Investors had been questioning high AI valuations and investments linking the industry’s largest companies to one another. The report also described concerns that Democratic control of state and local governments following the midterms could slow infrastructure projects. The new inquiry therefore compounds an existing repricing; it does not explain the whole decline.

Company-reported revenue for the quarter ended January 25, 2026. Data Center is included in total revenue; this snapshot predates the inquiry. Chart: Magica. Source: NVIDIA Financial Results.

Why Huang’s position matters to the valuation

Huang’s long tenure ties Nvidia’s leadership question to the company’s commercial record. Nvidia first became the world’s largest publicly traded company by market value in 2024 and subsequently became the first to reach $4 trillion and $5 trillion, according to the report. It fell behind Apple during last week’s turmoil.

The scale of that exposure is visible in Nvidia’s financial results for the quarter ended January 25, 2026. The company reported $62.3 billion in Data Center revenue, up 75% from a year earlier, out of $68.1 billion in total revenue. Dividing those rounded figures puts Data Center at about 91% of quarterly sales. That earlier operating snapshot illustrates the company’s dependence on infrastructure spending; it does not measure whether the inquiry has changed current orders.

Bernstein analysts drew that distinction in a Monday note cited in the investigation report: they considered demand for Nvidia’s products unlikely to be affected, while warning of greater risks to AI’s momentum as construction becomes more political. They also identified the company’s dependence on its co-founder as a leadership risk.

More than 90% of analysts covering Nvidia rated it a buy, with an average target nearly 80% above Friday’s closing price, according to FactSet data cited in the investigation report. Those are analysts’ expectations, not evidence of a recovery or an absence of commercial risk.

Nvidia also faces alternatives competing for AI spending. The market report described Alphabet’s Google expanding its AI-chip lineup as a challenger to Nvidia. A rally in semiconductor stocks therefore cannot by itself establish that Nvidia will retain the same share of future investment.

What the investigation must resolve

In its November 8 statement, Nvidia’s board said a committee of independent directors, assisted by outside independent counsel, would oversee the inquiry. It said it had no reason to believe national security or Nvidia secrets had been compromised, and that Huang would cooperate. The board also expressed confidence in Huang and his leadership team and promised updates as appropriate.

Those assurances are the board’s initial assessment, not the findings of a completed investigation. Its stated remit is to examine all available information; the announcement gives no completion date. The next substantive evidence must establish whether sensitive information was compromised and whether the findings change the board’s confidence in Huang. Any claim of commercial damage will also require evidence about customers and orders, beyond the movement in Nvidia’s shares.