Nvidia shares fell on Monday after the company said its board had opened an independent investigation into reports that chief executive Jensen Huang had been the target of a "foreign intelligence effort." Huang "fully supports the review and has committed to cooperating with it," the company said Sunday, CNBC reported. Neither The New York Times nor the Financial Times has accused Huang of wrongdoing, and no charges have been announced, Yahoo Finance reported. See our earlier report on the board's statement and Huang's staff email for earlier coverage. Madison Huang, his daughter and an Nvidia executive, has not been accused of wrongdoing.
How far Nvidia stock fell
Market figures moved through the session. Nvidia shares tumbled around 8% in early trading Monday, Nov. 9, extending last week's selloff and pushing the stock to fresh multi-month lows, Reuters reported. At those early levels, it said, the chipmaker would lose around $350 billion in value from its last closing price. CNBC, in a story updated Monday morning, said the stock fell more than 6%. Yahoo Finance earlier reported an overnight slip of about 3%, near $180, against Friday's Nasdaq close of $186.64. As of about 9:54 a.m. ET Monday, a Yahoo Finance quote showed Nvidia near $178.44, down about 4.4% from that Friday close; the session day low was about $170.24.
Chip suppliers in Asia rose on the day. TSMC closed 4.7 percent higher, Samsung Electronics gained 0.6 percent and SK Hynix added 0.4 percent, Reuters reported. AMD, Marvell, Arm, Intel and Qualcomm shares also rose Monday, CNBC reported.
What the board is investigating
The internal probe, announced Sunday, followed media reports that Huang had a close relationship with a Chinese businesswoman who allegedly passed information to Beijing, Reuters reported. Those are allegations in news reports, not findings by Nvidia's board. Huang told employees he had been unfaithful to his wife, without disclosing details of the relationship, according to Reuters.
The New York Times reported last month that Huang had a relationship with Alice Huang, an unrelated former executive at Singapore-based Megaspeed whom US authorities investigated and concluded was a Chinese intelligence asset, Reuters reported. Alice Huang did not respond to the Times last month, and Reuters could not determine her location to seek comment. Megaspeed did not respond immediately to a request for comment, and Monday was a public holiday in Singapore.
A committee of independent directors, assisted by outside counsel, will run the investigation, Yahoo Finance reported. The board said it has no reason to believe national security or Nvidia secrets were compromised.
What Huang and China said
In an email to staff, Huang wrote: "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry." He also said he had "fallen short" of his responsibility, CNBC reported.
Chinese Foreign Ministry spokesperson Guo Jiakun rejected the reporting, saying: "The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear," according to Reuters.
Huang's daughter Madison Huang, an Nvidia executive, canceled a planned visit to Seoul for an Nvidia conference, Reuters reported. South Korean chip startup Rebellions said events were canceled because of "unavoidable internal circumstances at Nvidia." Nvidia AI Day Seoul will proceed as planned, according to South Korean media. South Korea's deputy science minister said the government expected no disruption to contracted Nvidia GPU deliveries.
What analysts are watching
Chris Weston, head of research at Pepperstone, said: "The market's probably telling you now this does no favors to the stock whatsoever in a time when there's a lot of conjecture as to the build-out of data centers." He said he did not expect Huang to be replaced, adding: "If we genuinely thought he was going to step down ... the stock would be down — it would be an absolute bloodbath, to be honest," Reuters reported.
Dan Ives of Yorkville Ives & Co. told CNBC that talk of replacing Huang is "comedy" and that the episode marks a "black eye moment." He said that from an investor perspective, "the clear worry is, does Jensen stay on as CEO? The Street would say probably likely, but given the board investigation, anything could happen, and that creates a huge uncertainty."
Joachim Klement of Panmure Liberum said the impact is contained to Nvidia for now, and that if Huang's position were "endangered," then "Nvidia might cut back on supporting other companies, whether it's in Asia or in the U.S., that might then spread a little bit more into the other semiconductor names," per CNBC.
Ryu Young-ho of NH Investment & Securities said rivals including AMD could attract greater attention in the short term, but that Nvidia's products would be difficult to replace, though shipments to China could face further delays depending on how the situation developed, Reuters reported.
Governance is also a factor. Huang is Nvidia's fifth-largest shareholder with a stake of roughly 3.6 percent, according to LSEG data cited by Reuters. Nvidia has no dual-class shares giving its co-founder majority voting control, unlike Meta or SpaceX. Nvidia said its board has confidence in Huang, and some analysts said he has no natural successor inside the company.
What comes next
Analysts said a prolonged investigation could delay Nvidia's investment decisions or product launches, Reuters reported. Nvidia reports third-quarter earnings on Nov. 17 and holds a major conference in Washington, D.C., at the end of the month, CNBC reported.
The story reaches past one company. Weston tied the selloff to doubts about the data center build-out, and Klement said a weaker position for Huang could spread to other chip stocks if Nvidia cut back its support for partners. For AI buyers, Ryu's point is the practical one: Nvidia's products would be difficult to replace in the short term.
Sources
- Reuters via Investing.com: Nvidia's shares slide as chip giant probes CEO over spy claims
- CNBC: Nvidia stock falls 6% as scrutiny turns to Jensen Huang's relationship with alleged Chinese spy
- Yahoo Finance: Nvidia slips 3% overnight as board probes Jensen Huang
- llms.blog: Nvidia Board Opens Probe Into Spy Reports About CEO
