Nvidia's shares slide as firm probes CEO over spy claims

Nvidia shares tumbled today after an internal investigation into whether CEO Jensen Huang had been targeted by a foreign intelligence effort put his future at the AI chipmaker under scrutiny.

The internal probe followed a media report that Huang had a close relationship with a Chinese businesswoman who allegedly passed information to Beijing.

Huang told Nvidia's employees that he had been unfaithful to his wife, without disclosing details of the relationship.

The investigation, announced yesterday, has put a spotlight on Huang's future given Nvidia's status as the world's most valuable chipmaker and the CEO's role as the most prolific salesman of the AI boom.

The leather-jacketed Huang enjoys rock-star status worldwide, particularly in Asia, where he often mingles freely with fans, taking selfies and signing autographs for his devoted followers.

He is Nvidia's fifth-largest shareholder with a roughly 3.6% stake, according to LSEG data, and keeps a tight grip on the company through an unusually flat structure in which dozens of executives report directly to him.

But unlike Meta Platforms or SpaceX, Nvidia has no dual-class shares that would give its co-founder majority voting control.

The fallout of the probe extended to South Korea, where Madison Huang, Huang's daughter and an Nvidia executive, cancelled a planned visit to Seoul for an Nvidia conference that was set to begin today, according to companies she had been scheduled to meet.

Nvidia's shares pared losses from an 8% slide to now down 6%, extending last week's selloff and pushing the stock to fresh multi-month lows. At current levels, the chipmaker would lose more than $280 billion in value from its last closing price.

"The market's probably telling you now this does no favours to the stock whatsoever in a time when there's a lot of conjecture as to the build-out of data centers," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

But Weston said he did not think Huang, whom he described as the "godfather of AI", would be replaced.

"If we genuinely thought he was going to step down ... the stock would be down - it would be an absolute bloodbath, to be honest," he said.

Nvidia said its board has confidence in Huang. Some analysts said he has no natural successor within the company in case he decides to step down.

The New York Times reported last month that Huang had a relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed, who US authorities investigated and concluded was a Chinese intelligence asset.

"The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear," Chinese Foreign Ministry spokesperson Guo Jiakun told reporters in Beijing.

Megaspeed did not respond immediately to a request for comment today, a public holiday in Singapore.

Alice Huang did not respond to the New York Times last month when it first reported her relationship with Huang, and Reuters could not determine her location to seek comment today.

Asia partners unaffected

Shares in Nvidia's key Asian chip suppliers rebounded today after last week's selloff of AI-related stocks, with TSMC closing 4.7% higher, while Samsung Electronics and SK Hynix ending up 0.6% and 0.4%, respectively.

Some prominent figures weighed in on Huang's admission. Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, said on X the Nvidia CEO was an "incredible human", but if "indeed this is more than an affair, then it is obviously a real problem".

"I am hoping for a simple affair, not a risk to our national security," he said.

Tesla CEO Elon Musk commented, "I agree", on a post by Sequoia partner Shaun Maguire that said Huang "did something incredibly dumb" that was "bad for America" but that "Jensen is irreplaceable for America's AI leadership".

US President Donald Trump said yesterday he had not spoken to Huang about the allegations, but called him a fine person. "I hope everything's fine. He's done such an incredible job," he added.

When asked if he believed he should have acted on intelligence when he was briefed about it, Trump said: "No, I don't think so. I think he's an honourable guy. I think he probably has an excuse for it. You have to hear it."

The New York Times reported that Trump was briefed about the intelligence findings roughly a year ago and chose not to do anything with the information.

Nvidia is one of the world's most valuable publicly traded companies, alongside Apple and Microsoft. Its sales of computer chips to China have at times been targeted by US regulators seeking to limit Beijing's access to such technology.

"The key questions are whether he was aware of any espionage activities and whether any confidential or strategically sensitive information was compromised," said George Chen, a partner and chairman of digital practice at the Asia Group, a Washington-based consultancy.

"Those questions require evidence rather than speculation."

Mr Huang has lobbied Washington to loosen limits on sales of Nvidia chips to China in recent years, winning US President Donald Trump's approval for selling its H200 chips this year.

It is unclear if Beijing would allow Chinese companies to buy those chips in large quantities. Nvidia said in a regulatory filing in August that it has sold only a small amount to China as such sales are restricted by the Beijing government.

The H200 chips are not Nvidia's most cutting-edge models, but they are still advanced. Mr Huang lobbied Mr Trump to be allowed to sell Nvidia's less-advanced H20 chips, which were designed to comply with US export restrictions on China.

Chinese media have largely focused on Mr Huang admitting to the affair and state media outlets have mainly echoed the official government line.

Some have said the New York Times report was aimed at destabilising US-China relations.

"Whenever China-US relations begin to improve, there are often those firing shots from the shadows," the state-owned Global Times said.

Mr Huang, who has ‌led Nvidia for more than three decades, has been central to its rise to become a dominant supplier of AI chips.

"There is clearly risk that Jensen could ⁠be removed as CEO depending on ‌the Board investigation and this will add risk to the stock as he is so important to the Nvidia story and strategy globally," said Dan Ives, partner and senior managing director at Yorkville Ives & Co.

"This is a black eye moment for Jensen and will spark multiple congressional inquiries at a minimum and will create an overhang on the stock," Mr Ives said, adding that the news would also increase scrutiny about selling chips to China.

Read more:
Who is the executive accused of spying on Nvidia CEO?

Josh Gilbert, lead analyst at trading platform eToro, said Mr Huang's fingerprints were on every part of the company's rise, so any doubt over his position would matter to shareholders.

"While the investigation is likely to dent sentiment, it won't alter anything long-term unless it leads to a change at the top, at which point it becomes a completely different ballgame," Mr Gilbert added.

Top Republican politicians in the US House of Representatives had already called on Mr Huang to brief Congress this month about the New York Times report.

The report raises "significant national security concerns regarding (China's) access to sensitive US technology and information," they said in a letter dated 4 November.

"It is vital that Congress determines the extent to which US national security has been placed at risk," they added.

US export controls since 2022 ‌have sought to restrict China's access to advanced Nvidia chips and the equipment needed to make them.

Additional reporting: PA