Nvidia shares fell to about $177 on Monday, roughly 26% below the record high set in October, putting the stock in bear-market territory by the commonly used definition of a 20% decline. The retreat comes as the company faces scrutiny over CEO Jensen Huang and a case involving suspected chip smuggling, while Google has introduced two AI chips that compete directly with Nvidia's products.
Nvidia slips past the 20% decline threshold
A bear market is generally defined as a drop of at least 20% from a recent peak. Nvidia has now crossed that threshold. The stock also carries significant weight in major U.S. index funds, so its decline affects investors who hold those funds.
Nvidia has been one of the biggest beneficiaries of the AI investment boom. The pullback has renewed attention to its valuation, chip demand and competitive position. The available information does not break down the causes of the decline, however, and does not establish that any single development accounts for the full fall.
Board inquiry and chip-smuggling case
Nvidia's board opened an investigation on Sunday. Huang acknowledged having an extramarital relationship with Alice Huang, whom U.S. intelligence officials reportedly suspect of working as a spy for China. That allegation remains part of the investigation's background; the information available does not establish that she engaged in espionage.
The scrutiny also touches on Singapore-based Megaspeed, which bought billions of dollars' worth of Nvidia equipment for Chinese customers. U.S. officials suspect that some of the chips were smuggled into China in breach of export restrictions. Commerce Department investigators later referred the case to the Justice Department.
The referral reportedly followed contact between Nvidia's lawyers and Commerce Department investigators. The lawyers cited approval from a senior official for the handling of the matter. Information disclosed so far does not show that Nvidia changed the referral or the outcome of the investigation.
Nvidia has said it opposes chip smuggling. How the case proceeds, and whether the investigation has further effects on the company's business or leadership, remains unclear.
Google's new chips sharpen competitive focus
Google has announced two new AI chips that compete directly with Nvidia hardware. New products from rivals can shape expectations for Nvidia's long-term demand and market share, but details on the Google chips' performance, supply and customer adoption are not available. Their effect on Nvidia sales therefore cannot yet be assessed.
The share-price decline, board investigation, export-control case and new competition are now all in focus for investors. The measurable market move is a roughly 26% drop from Nvidia's October record. The allegations and the commercial impact of Google's chips remain subject to further evidence.