A sudden shift hit global financial markets on Tuesday as technology heavyweight Microsoft briefly overtook chipmaker Nvidia to become the world's second-most valuable company. This rapid reversal highlights growing volatility in artificial intelligence valuations. Just five weeks ago, Nvidia held a massive $1.84 trillion market-value lead over Microsoft, but that entire advantage vanished after Nvidia shares plunged over six per cent on Tuesday. Microsoft shares also fell by 2.7 per cent during the session, yet Nvidia's steeper decline allowed Microsoft to briefly move ahead before Nvidia reclaimed second place by the early afternoon. Apple remains the world's most valuable publicly traded company.

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Leadership crisis and intelligence probe rock Nvidia

Nvidia's market troubles deepened following disclosures regarding its chief executive, Jensen Huang. The chip giant suffered an estimated $470 billion loss in market value across Monday and Tuesday after Mr Huang admitted to an extramarital relationship. The controversy intensified as reports revealed that the woman involved is suspected of ties to Chinese intelligence, prompting investigations by Nvidia's board and the FBI. The episode has exposed serious governance concerns regarding Nvidia's reliance on its founder, who oversees roughly 60 direct reports without an explicit successor after leading the firm for 33 years. Although Nvidia expects to report $108 billion in quarterly revenue later this month, prediction markets currently give Apple a 71 per cent chance of ending 2026 on top, compared to 27 per cent for Nvidia and one per cent for Microsoft.

Microsoft gains ground as broader inflation jitters hit Wall Street

In contrast to Nvidia's governance setbacks, Microsoft demonstrated robust corporate performance, reporting quarterly revenue of $92.3 billion, up 19 per cent. Its Azure cloud computing business expanded by 48 per cent, driving its contracted commercial backlog to $677 billion. To meet surging demand, Microsoft invested $45.2 billion in computing infrastructure last quarter. Whilst significant capital continues to fund Nvidia processors, Microsoft is developing its proprietary Maia chips to handle Copilot tasks, aiming for large-scale deployment by 2027 to lower its reliance on external suppliers.

Concurrently, broader US stock indices fell on Tuesday after government reports indicated that American inflation slowed less than expected in October. Federal Reserve officials signalled support for quick interest rate hikes to combat persistent price pressures. The tech-heavy Nasdaq index dropped 0.7 per cent, whilst stock bourses across Asia mostly registered gains. In another key development, artificial intelligence startup Anthropic lowered its initial public offering target to $64 billion amidst market wariness, despite its quarterly revenue leaping to $17 billion. Market analysts warned that tech investments may face ongoing headwinds even if upcoming stock listings prove successful.