Futures tracking the Nasdaq 100 led Wall Street lower on Thursday after Nvidia shares plunged in premarket trading on reports that its board was weighing the future of chief executive Jensen Huang, rattling AI-linked stocks around the world. At 4:11 a.m. ET, Nasdaq 100 e-minis were down 226.25 points, or 0.79%, while S&P 500 e-minis fell 29.25 points, or 0.38%, and Dow e-minis were up 20 points, or 0.04%. Dow Jones Newswires put the Nasdaq futures fall at about 0.9% and the S&P 500 decline at about 0.4%, with Dow contracts flat.

Nvidia, the chipmaker at the centre of the artificial intelligence boom, dropped about 7% in premarket trading, reversing a 2.9% gain in Wednesday's regular session. The Wall Street Journal reported that Nvidia's board met late on Wednesday to discuss Huang's position following reports involving two extramarital affairs by the company's longtime leader, and Bloomberg reported that the company was working with an outside firm to identify potential successors. No decision on Huang's future had been announced by Thursday morning, and investors were awaiting clarity later in the day.

Chip and AI infrastructure stocks slide

The sell-off spread quickly across the AI supply chain. Chipmakers Intel, Marvell Technology and Micron fell between 2.6% and 3.4% in premarket trading, while AI infrastructure firms CoreWeave and Nebius dropped 7.2% and 4.7% respectively. Among the Magnificent Seven, Tesla slipped 0.8% while Alphabet gained 0.5%.

Not every chipmaker fell. Advanced Micro Devices and Broadcom both gained in after-hours trading on Wednesday, suggesting some investors expect AI spending to shift towards Nvidia's rivals if its leadership crisis deepens. In Asia, the fallout was broad: South Korea's heavyweight chip companies were mixed, SoftBank Group shares slid more than 3% in Tokyo, and stock indexes in Japan, South Korea, Hong Kong and Shanghai all fell. Taiwan's Taiex dropped 2.6% as chip stocks led the decline.

Wednesday's rally under threat

The declines threatened to erase Wednesday's gains, when strong results from CoreWeave helped AI stocks regain some footing after a sharp sell-off earlier in the week. The S&P 500 rose 1.31% to 7,619.38 on Wednesday, the Nasdaq Composite climbed 1.60% to 25,466.19, and the Dow Jones Industrial Average added 254.60 points, or 0.49%, to 52,486.49, according to the Associated Press. The Nasdaq 100 jumped 2.28% in the session, and the S&P 500 technology sector rose 2.7%, the best performance of the index's 11 major sectors.

"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. Saxo strategist Charu Chanana said the key question was whether Nvidia's problems would simply redistribute AI spending towards competitors or begin to disrupt spending itself.

What to watch next

The AI trade was already facing questions about infrastructure spending, financing and profitability before the Nvidia reports, and concerns about a slowdown in data-centre development have intensified following the Democrats' midterm election gains. Some investors, however, see the recent pullback as a buying opportunity. "It's a great time to be an AI company," said Tom Hulick, chief executive of Strategy Asset Managers, adding that he did not see capital expenditure on AI slowing down.

Away from equities, Treasury yields ticked higher as traders returned after the Veterans Day holiday, with the 10-year yield nudging higher to trade close to 5% as investors continued to price in a December Federal Reserve rate rise. Bitcoin continued to struggle, trading lower at around $73,500. Attention now turns to Nvidia's third-quarter results, due on 17 November, and to US home sales data and appearances from Federal Reserve policymakers later on Thursday, including New York Fed President John Williams.