By Niket Nishant and Utkarsh Hathi
Nov 12 (Reuters) – Futures tracking the Nasdaq 100 led Wall Street lower on Thursday after Nvidia shares plunged on reports that its board was weighing the ouster of CEO Jensen Huang, souring sentiment toward AI-linked stocks.
Reports of a second extramarital affair involving Nvidia’s longtime leader sent its shares down 7.7% in premarket trading, as investors fretted over the potential fallout from any leadership change at the company central to the AI boom.
“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 Prime.
At 07:03 a.m. ET, Dow E-minis were up 16 points, or 0.03%, and S&P 500 E-minis were down 30.5 points, or 0.4%. Nasdaq 100 E-minis were down 246.25 points, or 0.86%.
Chipmakers Intel, Marvell Technology and Micron fell between 2.7% and 3.5%, while AI infrastructure firm CoreWeave dropped about 7%, and peer Nebius edged 0.4% lower ahead of results.
Shares of data center-related firms IREN , Applied Digital and Core Scientific also traded lower.
The declines threatened to erase Wednesday’s gains, when strong results from CoreWeave helped AI stocks regain some footing. Among the Magnificent Seven, Tesla slipped 0.7% while Amazon.com gained 0.3%.
Concerns about a slowdown in data-center development have intensified following the Democratic midterm election sweep, though 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,” Strategy Asset Managers CEO Tom Hulick said.
“The correction in the Nasdaq could quite possibly be an opportunity to enter some of the names without the froth.”
Nvidia’s rivals Advanced Micro Devices and Broadcom were up 2.3% and 1.4%, respectively.
INFLATION DATA AWAITED
Investors are also gearing up for the release of the Producer Price Index on Friday, which could help shape inflation expectations after data earlier this week showed consumer prices rose more than expected last month.
A drop in oil prices so far in November has helped ease some concerns about price pressures, but investors remain wary of geopolitical risks in the Middle East.
Traders see a December rate hike by the Federal Reserve as a certainty, with about a 10% chance of an outsized 50-basis-point increase, according to the CME FedWatch tool.
“Energy effects will take longer to fade. Oil prices have remained near $100 per barrel for much of the year, extending their contribution to inflation,” said Josh Hirt, senior US economist at Vanguard.
“But absent a renewed and sustained increase in prices, that contribution should remain limited.”
Separately, Michael Saylor’s Strategy fell 6.4% premarket after index operator MSCI said it will remove the stock from its global indexes.
(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Anil D’Silva and Devika Syamnath)
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