Technology shares came under pressure on Thursday as investors kept a nervous eye on AI giant Nvidia, whose influential boss Jensen Huang is facing a board revolt amid a probe into an affair with a woman accused of spying for China.
Reports of another affair, between Huang and a senior Nvidia executive, piled on the pressure and reportedly prompted an emergency board meeting late Wednesday.
Shares in Nvidia, which is due to report quarterly earnings next Tuesday, slid about 6% in pre-market trading.
"A leadership scandal at one of the world's biggest companies is enough to bring the tech stock rally to a halt, and the Nasdaq is pointing to a lower open," said Kathleen Brooks, research director at trading group XTB.
She added that the Nvidia fallout was "helping to spur a rotation into European markets that are traditionally low-tech".
London, Paris and Frankfurt all climbed in midday deals.
Frankfurt's blue-chip DAX reached a record high above 27,000 points thanks to healthy corporate earnings and recent optimism about the artificial intelligence boom.
Companies linked to the AI sector had enjoyed a healthy bounce in recent days after last week's sell-off sparked by regulatory concerns following the Democratic sweep of the US Congress.
But the Nvidia leadership crisis rattled investors on Thursday, sending Asian stock markets lower.
Huang faces the boot after he admitted to an extramarital affair, reportedly with Alice Huang, a senior executive at Singapore-based data centre company Megaspeed who US officials believe was working for Chinese intelligence.
Beijing has rejected the spying allegations.
The New York Times reported on Wednesday that Huang was also involved in a second extramarital affair, with the company's vice president of health care, Kimberly Powell.
That prompted a last-minute board meeting, but no official announcements have yet been made on the outcome.
The stock has shed 24% of its value over the past month, wiping around $1.4tn off its market capitalisation.
"The integrity of the $1tn (revenue) forecast, in the wake of this scandal, is likely to be a key question on Nvidia's earnings call next week," Brooks said.
Huang has built Nvidia into one of the world's biggest and most important companies, designing advanced chips crucial to the AI buildout that has helped drive stock markets to record highs and boosted economies around the world.
But analysts say the crisis has exposed an alarming lack of a succession plan for Huang, the only CEO Nvidia has ever had.
"Nvidia has spent years convincing investors that it is one of the most important companies in the AI revolution," wrote Charu Chanana, chief investment strategist at Saxo Markets.
"An abrupt exit without a credible succession plan could force investors to reassess how much of Nvidia's future depends on Huang personally," she said.