Nvidia scandal hits tech stock rally

Concerns have mounted over the AI trade, including over growing tech-sector borrowing and circular financing in the industry. The crisis at Nvidia reversed a brief AI-led stocks rally, intensifying worries of the tech bubble bursting. Markets in South Korea and Taiwan — key suppliers of the chips powering the AI buildout — fell, and shares in Nvidia, recently the world’s most valuable company, declined 6% in premarket trading. Concerns have mounted over the AI trade, notably over growing tech-sector borrowing, circular financing in the industry, and questions over whether revenues will keep pace with historic capex plans. The potential ouster of Nvidia’s CEO risks deepening those worries: “ This is an unequivocal negative for Nvidia and the entire AI ecosystem,” one analyst told Bloomberg. “He is not only the face of AI but arguably the architect of the AI infrastructure.”