Microsoft overtakes Nvidia as world's second-most valuable company amid CEO controversy

Microsoft overtook Nvidia to become the world's second-most valuable company on Tuesday as shares of the artificial intelligence chipmaker plunged more than 6 per cent amid concerns over the outlook for AI and an investigation into whether its chief executive, Jensen Huang, had been targeted by a foreign intelligence operation.

The sharp decline in Nvidia's stock pushed its market capitalisation below that of Microsoft for the first time since June 2025, marking a significant shift in the rankings of the world's largest publicly traded companies.

During trading, Microsoft shares were down 0.4 per cent at $543.25, while Nvidia shares fell more than 6 per cent to approximately $167.11.

The reversal came as investors assessed the implications of an internal investigation involving Huang, whose leadership has been central to Nvidia's rise as one of the most influential companies in the global AI industry.

𝗡𝘃𝗶𝗱𝗶𝗮 𝗳𝗮𝗰𝗲𝘀 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝘂𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆

The sell-off followed reports that Nvidia's board had initiated an independent investigation into whether Huang was targeted by a foreign intelligence effort.

The investigation was launched following media reports concerning Huang's personal relationship with a woman suspected of having links to Chinese intelligence.

Huang acknowledged having an extramarital relationship in a communication to employees but did not publicly disclose details about the woman involved.

The allegations have raised questions about potential security risks, given Nvidia's central position in the global semiconductor industry and the strategic importance of its advanced AI chips.

However, no public evidence has established that sensitive company information was compromised or that Huang's business decisions were influenced by the alleged intelligence operation.

Nvidia's board has expressed confidence in Huang, while the company continues to examine the circumstances surrounding the allegations.

China has rejected the espionage claims, describing them as baseless accusations.

𝗠𝗶𝗰𝗿𝗼𝘀𝗼𝗳𝘁 𝗿𝗲𝗰𝗹𝗮𝗶𝗺𝘀 𝘀𝗲𝗰𝗼𝗻𝗱 𝘀𝗽𝗼𝘁

Microsoft's rise in the market capitalisation rankings did not result from a sharp increase in its own share price. Instead, the company's relatively modest decline was outweighed by the much steeper fall in Nvidia's valuation.

The development illustrates how rapidly the rankings of the world's largest technology companies can change in response to investor sentiment.

Nvidia had emerged as one of the biggest beneficiaries of the artificial intelligence boom, driven by demand for its graphics processing units used in training and operating advanced AI systems.

Its chips have become essential components of data centres operated by major technology companies developing generative AI services and other computationally intensive applications.

Microsoft, meanwhile, has expanded its AI investments through its Azure cloud platform, enterprise software products and integration of artificial intelligence into its services.

Both companies remain central to the development of AI infrastructure, although their business models expose them to different risks.

𝗔𝗜 𝗯𝗼𝗼𝗺 𝘂𝗻𝗱𝗲𝗿 𝘀𝗰𝗿𝘂𝘁𝗶𝗻𝘆

The decline in Nvidia's shares also comes amid broader questions about the sustainability of the massive investments being made in artificial intelligence.

Technology companies have committed substantial resources to expanding data centres, acquiring advanced processors and developing increasingly sophisticated AI models.

Investors are closely monitoring whether these expenditures will generate sufficient revenue and profits to justify the valuations of companies benefiting from the boom.

For Nvidia, uncertainty surrounding its chief executive has added another layer of concern.

Huang co-founded the company in 1993 and has overseen its transformation from a graphics chip manufacturer into a leading supplier of AI computing technology.

His close involvement in product development, customer relationships and strategic partnerships has made him a central figure in the company's operations.

Analysts have warned that prolonged uncertainty over the investigation could increase concerns about leadership continuity, even as Nvidia retains a strong position in the advanced chip market.

The latest market movements underline the sensitivity of technology valuations to both industry-wide expectations and company-specific developments.

Microsoft's return to second place reflects the immediate impact of Nvidia's sell-off rather than a fundamental change in the competitive positions of the two technology giants.