In a significant shift in the global market rankings, Microsoft has surpassed Nvidia to become the world's second-most valuable company. This development follows a more than 6% plunge in Nvidia shares on Tuesday, raising concerns about the future of artificial intelligence (AI) and fresh scrutiny on CEO Jensen Huang. Microsoft shares dipped 0.4%, while Nvidia fell to around USD 167.11. The decline erased hundreds of billions from Nvidia's market value, pushing the chipmaker below Microsoft for the first time since June 2025.
The fall in Nvidia's shares was not attributable to a single factor. Investors are questioning whether the substantial spending on AI infrastructure will generate returns commensurate with skyrocketing valuations. These concerns have been compounded by reports linking Jensen Huang to a Chinese businesswoman, Alice Huang, who is under investigation by US authorities.
The latest sell-off indicates that investor confidence in Nvidia is no longer unwavering. The immediate question for investors is whether Nvidia's troubles are isolated or part of a broader reevaluation of AI-related spending. The ongoing internal investigation by Nvidia's board and the FBI examination of the matter add to the uncertainty surrounding the company.
Alice Huang, a former senior executive at Shanghai Hexi Investment Management, has been under scrutiny for her role in facilitating shipments of Nvidia chips worth USD 7.5 billion to Chinese companies. The reports have raised questions about Nvidia's export-control compliance and corporate governance. The FBI is investigating whether Jensen Huang may have been targeted by a foreign intelligence operation, but details about the investigation are limited.