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Nvidia shares staged a sharp premarket rebound Wednesday after two punishing sessions tied to the scandal surrounding CEO Jensen Huang. The recovery offered investors some relief, but scrutiny remained fixed on potential damage to the world’s most valuable technology company.

The stock was 5.3% higher in premarket trading as of 5:47 a.m. ET. That move followed a 5.47% decline Tuesday and a 4.3% drop Monday as additional details emerged about Huang’s affair with an alleged Chinese spy.

The two consecutive declines showed how quickly concern about Huang had spilled into Nvidia’s stock performance. Investors are now assessing whether the matter could produce damaging effects for the company’s operations, valuation or leadership.

Nvidia said Tuesday that it hired law firm Wachtell, Lipton, Rosen & Katz to conduct an investigation. The review will examine whether company secrets or national security were compromised, placing the controversy directly alongside questions about sensitive information.

Huang returned to the office Monday and tried to project “business as usual,” according to people familiar with the matter who spoke with CNBC. He was also in the office Tuesday, where he conducted meetings as Nvidia approached its next quarterly report.

The company is scheduled to report quarterly earnings on Nov. 17. That approaching date raises the immediate stakes for investors trying to weigh the scandal against Nvidia’s business performance and the possibility of further developments.

Bank of America outlined three possible scenarios in a Tuesday note, each carrying a different investment outcome. The range included a contained impact, a period of prolonged uncertainty and a more serious escalation that could force investors to reassess earnings.

Under the contained scenario, Nvidia would maintain leadership continuity and limit the fallout. A second scenario would leave uncertainty hanging over the company for longer, putting pressure on its valuation before the earnings announcement.

The final scenario described a potentially more damaging outcome. BofA research analyst Vivek Arya said it could involve “adverse findings, leadership disruption or tighter restrictions requiring earnings reassessment,” according to the note.

The possibility of tighter restrictions is one of the concerns weighing on Nvidia after Huang’s affair became public. Zacks’ Chief Equity Strategist John Blank said the selloff reflected concern that the United States might impose additional restrictions in response.

Blank said investors were also confronting the risk that further problems could surface as the story develops. He captured that unease with a blunt question: “What else has Jensen done?”

The strategist said the controversy was harmful not only to Nvidia and Huang, but also to the wider investment enthusiasm surrounding artificial intelligence. “It’s not good for Nvidia. It’s not good for Jensen Huang. It’s certainly not good for the AI trade,” Blank told CNBC’s “Squawk Box Europe” on Wednesday.

Morgan Stanley added to the pressure Wednesday by removing Nvidia from its list of top picks. The shares had fallen more than 25% since the firm placed Nvidia on that list on Oct. 2.

Analysts at Morgan Stanley described Huang’s leadership as “crucial” to Nvidia’s strategic direction. That assessment puts leadership stability at the center of the investment debate as the company’s investigation proceeds and the earnings date approaches.

Wednesday’s premarket rebound recovered part of the losses from Monday and Tuesday, but it did not resolve the questions confronting the company. Investors still face uncertainty over the investigation, possible restrictions, leadership continuity and whether the matter will require a reassessment of Nvidia’s earnings outlook.

For now, Huang remains at work and conducting meetings while Nvidia prepares its quarterly results. The stock’s 5.3% premarket advance showed a strong bounce, even as analysts continued to examine the potential consequences for the company and the broader AI trade.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.