Nvidia shares fell more than 4 per cent after the company opened an internal investigation into whether chief executive Jensen Huang had been targeted by a Chinese intelligence operation.
The inquiry has drawn attention to Huang’s personal relationship with a Chinese business executive linked to one of Nvidia’s partner companies. The executive has allegedly passed information to Beijing, though Nvidia said it had no reason to believe its secrets or US national security had been compromised.
In a letter to employees, Huang acknowledged that he had been unfaithful to his wife but did not provide further details about the relationship.
“NVIDIA’s Board of Directors has initiated an independent investigation. I support the investigation and will cooperate fully,” he said.
Nvidia said its board had launched the investigation on Sunday and would examine all available information. It added that US national and economic security was “paramount to the interests of NVIDIA and its shareholders”.
Jensen Huang’s future at Nvidia
The investigation has placed Huang’s position under scrutiny at a company valued at about $4.5 trillion. He owns 3.6 per cent of Nvidia and is its fifth-largest shareholder, according to LSEG data, but does not have majority voting control.
Analysts said the controversy was unlikely, based on the information currently available, to lead to Huang’s removal.
“Founder-led companies outperform because one person carries the vision,” said Michael Monaghan, portfolio manager of Founders 100 ETF. “Based on the current information, I would see that as highly improbable [that he is removed].”
The allegations concern Alice Huang, a former executive at Singapore-based Megaspeed. The two Huangs are not related.
Megaspeed, a data centre and cloud computing company, has described itself as a core business partner of Nvidia’s computing power cloud business in the Asia-Pacific region.
US authorities investigated Alice Huang and concluded that she was a Chinese intelligence asset, according to reports cited in the material. The Chinese Government has rejected the allegation.
“The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear,” Chinese Foreign Ministry spokesman Guo Jiakun told reporters in Beijing.
Nvidia’s fall came as other major US technology shares and wider markets rose. The Nasdaq was up 2.7 per cent in early trading, while Microsoft gained 2.2 per cent.
Advanced Micro Devices rose by more than 10 per cent following a new deal with Google and an upgrade from a stock analyst. Amazon climbed 3.8 per cent, while the Dow Jones Industrial Average rose 1.7 per cent and the S&P 500 gained 2.1 per cent.
The developments followed a difficult week for AI investors, after candidates running on anti-AI platforms won strongly in the US midterm elections. Democrats, who are more critical of the industry than their Republican colleagues, secured control of both chambers of Congress in the incoming legislature.
Most US ballot measures seeking to restrict the construction of new data centres also passed, briefly sending shares in major AI companies lower.
“Jensen has two sets of enemies in Washington: China hawks who want the export door shut, and the crowd trying to stop the data centre buildout. The longer this drags, the stronger they get,” Monaghan said.
