AMD Falls 8.75% as Huang Exit Rattles Semiconductor Trade

By Priya Raman

AMD closed down 8.75% on the 13th, the worst decline among mega-cap technology stocks, after former Nvidia Chief Executive Jensen Huang resigned amid an extramarital affair scandal. The sell-off spread across the semiconductor sector. Rivals fell alongside Nvidia, not apart from it.

What happened in the market?

The Philadelphia Semiconductor Index (a sector benchmark tracking major U.S.-listed chipmakers) dropped as much as 6% during the session before closing down 3.43%. The rout hit suppliers, competitors and memory makers alike.

Losers among the largest companies by market capitalization:

• Nvidia: -2.01%
• AMD: -8.75%
• Broadcom: -4.76%
• SK hynix: -4.30%
• Micron: -2.52%
• TSMC: -1.67%
• Tesla: -1.82%
• Alphabet: -0.98%
• SpaceX: -0.59%
• Amazon: -0.29%

The broader indexes fared better. The Dow Jones Industrial Average closed at 52,347.55, up 50.46 points, or 0.10%. The Standard & Poor's 500 fell 30.73 points, or 0.40%, to 7,561.67. The Nasdaq Composite dropped 229.82 points, or 0.91%, to 25,136.27.

Gainers included Meta, up 2.90%, Walmart, up 1.51%, Eli Lilly, up 1.26%, Apple, up 0.39%, Microsoft, up 0.17%, and JPMorgan, up 0.98%. The pattern is clear. Investors rotated out of semiconductors and into sectors untouched by the AI supply chain.

Why did Huang's exit hit rivals so hard?

Huang stepped down the previous day after 33 years leading the company. Reports said he had extramarital relationships with at least two female employees, in addition to Alice Huang, who has been identified as a Chinese spy. Chief Financial Officer Colette Kress has taken over as interim chief executive.

The market reaction extended far beyond Nvidia itself. Traders priced in damage to the circular trading system (the network of inter-company investment and purchase agreements Huang built within the AI industry) that competitors such as Broadcom and AMD also depend on. That expectation drove sharp declines even at firms with no direct exposure to the scandal.

Note what the sell-off assumes but does not prove. No company has reported canceled orders or contract changes. The decline reflects sentiment, not disclosed fundamentals. Nvidia itself fell only 2.01%, far less than AMD or Broadcom, an odd asymmetry the market has not explained.

What did the inflation data show?

Other sectors held up as investors digested the producer price index (a measure of prices received by U.S. producers, released by the Labor Department). The numbers came in below forecasts.

• Overall PPI: +0.3% in October from September, seasonally adjusted, versus a 0.4% market forecast
• Previous month: +1.4%, a sharp slowdown
• Year-on-year: +6.5%, slightly below the 6.6% forecast but the highest since November 2022
• Core PPI (excluding volatile food and energy prices): +0.3% month-on-month and +5.0% year-on-year, in line with forecasts

The reading trimmed expectations of an aggressive Federal Reserve move. The federal funds futures market raised the probability of a 0.25 percentage point increase at the Federal Open Market Committee meeting on Dec. 8-9 to 91.7%, from 85.5% a day earlier, according to the CME FedWatch tool. The probability of a 0.50 percentage point increase fell to 8.3% from 14.5%. Better inflation news did nothing for chip stocks. The two stories ran on separate tracks.

Where did oil prices land?

Oil prices were mixed amid forecasts of a global supply glut and rising U.S. inventories. Brent crude for January delivery settled at $95.84 a barrel on the ICE Futures Europe exchange in London, up 0.02%. West Texas Intermediate for December delivery closed at $88.56 a barrel on the New York Mercantile Exchange, down 0.20%.

The International Energy Agency, in its monthly oil market report, forecast a supply surplus in the fourth quarter. The agency said the market is showing signs of rebalancing as global supply outpaces demand for the first time since the outbreak of the war in Iran.

Declines stayed limited. Geopolitical tensions around the Strait of Hormuz and threats of attacks on vessels continue to support prices. Traders weigh a surplus forecast against a chokepoint risk.

What remains unanswered?

The session left three open questions. First, whether Kress can hold the AI investment network together as interim chief executive. Second, whether the spy identification around Alice Huang triggers regulatory or security scrutiny of the company. Third, whether AMD's near-9% drop reflects specific exposure or indiscriminate sector selling. None of these has an answer yet. The market sold first and left the analysis for later.