US STOCKS-Nasdaq, S&P 500 futures fall as Nvidia turbulence unsettles AI stocks

By Niket Nishant

Nov 12 (Reuters) - Futures tracking the Nasdaq 100 led Wall Street lower on Thursday after Nvidia shares plunged on reports that its board was weighing the ouster of CEO Jensen Huang, souring sentiment toward AI-linked stocks.

The AI heavyweight dropped 6% in premarket trading following reports of two extramarital affairs involving its longtime leader, as investors fretted over the potential fallout from any leadership change at the company central to the AI boom.

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

At 5:32 a.m. ET, Dow E-minis were up 61 points, or 0.12%, S&P 500 E-minis fell 24.25 points, or 0.31%, and Nasdaq 100 E-minis slipped 181 points, or 0.64%.

Chipmakers Intel INTC.O, Marvell Technology MRVL.O and Micron MU.O fell between 1.9% and 2.8%, while AI infrastructure firm CoreWeave CRWV.O dropped about 6%. Nebius NBIS.O was flat ahead of its quarterly results.

The declines threatened to erase Wednesday's gains, when strong results from CoreWeave helped AI stocks regain some footing. Among the Magnificent Seven, Tesla TSLA.O slipped 0.3% while Amazon.com AMZN.O gained 0.3%.

The sharp swings underscore a tug of war over the AI trade. Concerns about a slowdown in data-center development have intensified following the Democratic midterm election sweep, though some investors see the recent pullback as a buying opportunity.

"It's a great time to be an AI company. You definitely have a lot of contagion that happens with retail investors and algorithmic trading, but we don't see capital expenditure on AI slowing down," Strategy Asset Managers CEO Tom Hulick said.

"The correction in the Nasdaq could quite possibly be an opportunity to enter some of the names without the froth."

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INFLATION DATA AWAITED

Investors are also gearing up for the release of the Producer Price Index on Friday, which could help shape inflation expectations after data earlier this week showed consumer prices rose more than expected last month.

A drop in oil prices so far in November has helped ease some concerns about price pressures, but investors remain wary of geopolitical risks in the Middle East.

Traders see a December rate hike by the Federal Reserve as a certainty, with about a 10% chance of an outsized 50-basis-point increase, according to the CME FedWatch tool.

"Energy effects will take longer to fade. Oil prices have remained near $100 per barrel for much of the year, extending their contribution to inflation," said Josh Hirt, senior US economist at Vanguard.

"But absent a renewed and sustained increase in prices, that contribution should remain limited."

Separately, Michael Saylor's Strategy MSTR.O fell 4.3% premarket after index operator MSCI said it will remove the stock from its global indexes.