Nvidia, the Santa Clara-headquartered chipmaking giant, has seen its shares plummet by 27% in just over a month, erasing a staggering $1.58 trillion from its market capitalization. This precipitous drop, occurring over 26 trading sessions, has significantly impacted at least a dozen domestic mutual fund schemes, particularly passive funds with substantial holdings in the tech powerhouse.
Passive Funds Grapple with Nvidia's Decline
The battering of Nvidia's stock has sent ripples through India's passive investment landscape. Bloomberg data, compiled by Business Today, highlights several funds directly affected. The Motilal Oswal NASDAQ 100 ETF, for instance, held Nvidia as its second-largest position, accounting for 8.02% of its assets under management (AUM). Its Nvidia shares, valued at Rs 1,065 crore on October 31, dwindled to Rs 899 crore by November 12.
Similarly, the Mirae Asset NYSE FANG+ ETF, where Nvidia was the fourth-largest holding at 10.38% of AUM, saw its Nvidia valuation fall from Rs 458 crore to Rs 342 crore. Other affected funds include the Motilal Oswal S&P 500 Index (Nvidia shares down from Rs 339 crore to Rs 286 crore), ICICI Pru NASDAQ 100 Index, DSP Multi Asset Allocation, Mirae Asset S&P 500 Top 50 ETF, and Axis Large & Mid Cap Fund.
CEO Controversy and Brokerage Downgrades Fuel Sell-Off
The sharp downturn in Nvidia's stock is attributed to mounting controversy surrounding CEO Jensen Huang. Reports suggest Huang's alleged affairs, one reportedly linked to a suspected Chinese spy, have prompted the chipmaker to consider his ousting, potentially naming a temporary chief while searching for a permanent replacement. This uncertainty has rattled investor confidence.
Major brokerages have responded with steep target cuts and downgrades. Bernstein, stating it had "had enough," slashed its target on Nvidia to $200 from an earlier $400. Baird also downgraded the stock to 'Neutral' from 'Outperform' and reduced its target price to $200 from $500. These analyst revisions reflect growing concerns over the company's leadership stability and future outlook.
Nvidia's market capitalization, which stood at $5.76 trillion on October 6, has since fallen to $4.18 trillion as of November 12. This figure does not even account for an additional 8.61% plunge observed in post-market trade following the Bloomberg report on the CEO's potential departure.