Nvidia shares were down 7.7 percent in premarket trading at 7:03 a.m. ET on Thursday, Nov. 12, Reuters reported, after reports late Wednesday about Chief Executive Jensen Huang and a board meeting on his future. The shares had fallen more than 8 percent in after-hours trading on Wednesday.

What was reported

Late Wednesday, the New York Times reported that Huang had an affair with an Nvidia executive who reported to him, and the Wall Street Journal, citing people familiar with the matter, reported that the board was preparing to oust him, according to a Reuters market wrap. The board met late Wednesday to decide his future, Reuters reported, citing a source, in its Morning Bid column. Nvidia did not respond to requests for comment, according to Reuters. No decision had been announced by early Thursday.

The reports followed a statement from Nvidia's board on Nov. 8. In it, the board said it was starting an independent investigation "in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort," led by a committee of independent directors with outside counsel, according to the statement. The board said it "has no reason to believe that either national security or NVIDIA secrets were compromised" and that "The Board has confidence in Jensen." Huang committed to cooperating with the investigation, the statement said.

Key-person risk

Investors have a name for the exposure a company carries when its value is closely tied to one executive: key-person risk. The question it raises is practical. If that person leaves, who runs the company, and how quickly is that settled?

On that point, Reuters reported that Nvidia has no clear succession plan. Ian Buck and Chief Financial Officer Colette Kress are "among the possible contenders" for interim chief executive, according to the Morning Bid.

The decline in the stock began before this week's reports. Nvidia has shed 24 percent of its value over the past month, about $1.4 trillion of market capitalization, AFP reported. Two sessions earlier this week erased about $430 billion of market value before the stock rose 2.9 percent on Wednesday, Reuters reported.

Separately, Democratic senators urged the Trump administration to preserve all documents linked to Nvidia's chip exports to China, Reuters reported.

Concentration

The second mechanism is concentration. When a large share of a market's gains has come from a small group of companies tied to one theme, a problem at one of them can reach the rest.

"The controversy creates an unusually difficult problem for investors, who have spent years concentrating capital in companies considered indispensable to the AI economy," Terri-Leigh Bennett, chief operating officer of CMS Prime, told Reuters.

The premarket moves on Thursday were uneven. Intel, Marvell and Micron were down 2.7 percent to 3.5 percent, and CoreWeave was off about 7 percent, a day after it rose 24.7 percent on its results, Reuters reported. Advanced Micro Devices rose 2.3 percent and Broadcom 1.4 percent. Nasdaq 100 E-minis were down 0.86 percent at 7:03 a.m. ET. Those are premarket and futures prices, not closes.

The split matters. A leadership question at one company is not the same as a cut in spending on the equipment it sells, and some chipmakers rose on Thursday morning while others fell.

"We don't see capital expenditure on AI slowing down," Tom Hulick, chief executive of Strategy Asset Managers, told Reuters.

For now the consequence shows up in the share price. Until the board announces a decision, Nvidia trades on an open question about who will run it.