Nvidia slides 7% on ouster reports; Asia chip stocks hold up

Key market highlights:

• Nvidia declined roughly 7% in extended trading following reports that the board is considering removing Jensen Huang as CEO. Bernstein, Baird, and Morgan Stanley all pulled back from the stock.
• Competitors AMD and Broadcom rose in after-hours trading. Nasdaq 100 futures were down about 0.8%, compared with a 0.3% decline for S&P 500 futures.
• Asian semiconductor stocks proved resilient: Samsung gained nearly 2%, SK Hynix added 0.8%, the Nikkei and Topix both inched up, while the Hang Seng dropped almost 1%.
• Japan's October producer price index came in at 7.1% year-on-year, above the 6.5% estimate. Bank of Japan board member Asada advised caution on hiking speed, and currency official Mimura said foreign-exchange moves have been too fast, with USD/JPY trading near 160.
• Deutsche Bank projects three consecutive quarter-point rate increases from the Federal Reserve, UBS sees two, and Commonwealth Bank of Australia forecasts higher Treasury yields.
• Oil prices softened as OPEC's crude output returned close to prewar levels. Strategy shares fell after MSCI confirmed the company's removal from its global indexes.

Nvidia

Nvidia was the focus of the session. In after-hours trading, shares traded near $161, dropping about 7%. This came after The Wall Street Journal reported the board is preparing to remove CEO Jensen Huang. According to Reuters, the board convened on Wednesday to decide his fate; no outcome had been announced when this was written. The reports followed a New York Times article stating that Huang had a relationship with Kimberly Powell, a subordinate executive. The board had also been probing his connections to a businesswoman identified by US officials as a Chinese intelligence asset.

Wall Street analysts reacted promptly. Bernstein's Stacy Rasgon cut Nvidia to Market Perform and reduced his price target by half to $200. He kept earnings forecasts the same and lowered the valuation multiple, stating that while AI demand is still robust, the leadership risk is not yet fully priced in. Baird had earlier downgraded the stock to Neutral, also with a $200 target, and Morgan Stanley as well pulled back.

The sell-off did not affect the entire AI sector uniformly. Competitors AMD and Broadcom advanced in after-hours trading. Bloomberg Intelligence indicated that Google's TPU chips could gain market share if clients diversify away from Nvidia, and it forecasts TPU sales exceeding $50 billion by 2027. Super Micro Computer, CoreWeave, and Oracle, which rely heavily on Nvidia hardware, declined. Nasdaq 100 futures dropped about 0.8%, compared with a roughly 0.3% decline in S&P 500 futures.

Next week's schedule is packed. Nvidia is set to report earnings on November 17. Three House committee chairs have requested a briefing with Huang on November 18. Anthropic's market debut is expected on November 19, with Nvidia among its private placement investors.

Asian equities

Asia's semiconductor supply chain fared better than US futures had implied. In Seoul, Samsung Electronics rose nearly 2% and SK Hynix added about 0.8%, lifting the Kospi by about 0.4%, even as the tech-oriented Kosdaq slipped about 0.8%. In Tokyo, the Nikkei 225 edged up about 0.25% to around 61,400, and the Topix gained about 0.5%. Hong Kong's Hang Seng dropped almost 1%, while the Shanghai Composite added about 0.2%. The overall moves suggest investors view the Nvidia turmoil as a company-specific governance issue rather than a sign of weak AI demand.

Japan

Japan's corporate goods price index increased 7.1% year-on-year in October, surpassing the 6.5% prediction. The rise was driven by oil, chemicals, steel, and utilities. A weak yen pushed up yen-denominated import prices by roughly 25% year-on-year. The figures reinforce the argument for a Bank of Japan rate increase in December.

Not all board members are eager to act. Toichiro Asada, who opposed both rate increases this year, said in a speech that policy is already in the estimated neutral range and that the Bank should carefully consider the speed of future increases.

Currency authorities intensified their caution. Atsushi Mimura, vice finance minister for international affairs, stated that foreign-exchange moves in recent days have been excessively fast. USD/JPY traded in a tight range near 159.70, just below 160, a level that triggered intervention twice already this year.

US rates and the Fed

Banks kept recalibrating after Tuesday's strong US inflation data. Deutsche Bank forecasts quarter-point rate increases from the Fed in December, January, and March. UBS maintains its baseline of hikes in December and March and sees little backing for a 50-basis-point move, even though Governor Christopher Waller floated the idea. Commonwealth Bank of Australia stated that Treasury yields can still climb, as growth and rate hike expectations offset the negative pressure from falling oil prices.

Oil and gold

Oil prices declined. Brent crude fell about 1.4% to roughly $91.40 a barrel, and WTI dropped about 1.3% to around $85.40. OPEC data indicated the group's crude output rose nearly 2 million barrels per day in October, close to prewar levels, as Saudi Arabia boosted production to around 10.6 million barrels per day using pipelines and other methods. Shipments through the Strait of Hormuz are still well below normal. Spot gold slipped about 0.3% to around $3,987 an ounce, staying under $4,000 as expectations of Fed rate hikes weighed on the metal.

Strategy

Strategy shares traded near $119 in after-hours trading, down about 2.6%. This followed MSCI's confirmation that it will remove the bitcoin treasury company from its global indexes, including the MSCI USA Index, after the market close on November 30. It is the first removal under MSCI's new rule that excludes non-operating companies. Analysts estimate that index-tracking funds will sell approximately $2.8 billion in shares. Bitcoin remained largely unchanged at around $73,800.