Nvidia shares fell sharply after the company’s board launched an independent investigation into allegations that China targeted chief executive Jensen Huang in an intelligence operation.
The inquiry has raised questions about Mr Huang’s future at the chipmaker, which he co-founded and helped build into the world’s second-most valuable company, with a valuation of $4.5 trillion.
Nvidia’s shares dropped $10.40, or 5.7 per cent, to $176.24 shortly after markets opened on Monday. The stock had already fallen by almost 20 per cent over the previous month amid a wider sell-off in artificial intelligence companies.
The allegations concern Mr Huang’s reported close relationship with Alice Huang, whom US intelligence officials believe was a spy for China’s Ministry of State Security, the country’s main intelligence agency.
Nvidia did not immediately respond to a request for comment. China’s government rejected the claims, with Guo Jiakun, a spokesman for its Ministry of Foreign Affairs, saying: “The so-called Chinese spy narrative is entirely baseless and constitutes slander and smear.”
Dan Ives, a technology analyst at Yorkville Ives, said the allegations would prompt questions about the leadership of Nvidia, whose high-end artificial intelligence chips are barred from sale to China because of competitive concerns.
“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 for a myriad of reasons,” Mr Ives said in a research note. “The key question investors will be asking is: Will Jensen remain CEO of Nvidia?”
He added: “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.”
Potential impact on Nvidia’s China sales
The board investigation could also increase the risk of further US restrictions on Nvidia’s chip exports, according to Adam Crisafulli of Vital Knowledge.
Mr Huang has lobbied federal authorities to loosen restrictions on Nvidia’s sales to China. President Trump approved the sale of the company’s H200 chips this year, although they are not Nvidia’s most advanced models.
Mr Huang had previously sought permission from Mr Trump to sell the less-advanced H20 chips, which were designed to comply with US export controls on China.
Mr Crisafulli said the possible fallout from the allegations could be “dramatically more draconian restrictions” on sales of sophisticated chips to China. He said the main concern was not the H200, but the possibility that higher-end Nvidia products were still reaching Chinese buyers.
