Nvidia board opens investigation into CEO Jensen Huang over foreign intelligence reports
Shares of Nvidia tumbled 5% at the opening bell Monday after the computer chip maker, central to the artificial intelligence race, opened an investigation into reports that CEO Jensen Huang was the “target of a foreign intelligence effort.”
Nvidia announced the investigation on Sunday. The announcement followed Huang’s acknowledgment that he had been intimate with a business executive who, according to The New York Times, U.S. intelligence determined was gathering information for China.
China’s Foreign Ministry dismissed the spying allegations Monday, calling them a smear campaign against Beijing.
Nvidia chips power many of the data centres and computing systems used to train and run AI models. Its advanced processors have also been a focus of U.S. export restrictions aimed at limiting China’s access to cutting-edge semiconductor technology.
Dan Ives, partner and senior managing director at Yorkville Ives & Co., wrote that there is a small chance Huang is removed or steps down from the CEO post, saying that Huang is “not replaceable.” Ives also wrote that there is a risk, as Huang could be removed as CEO depending on the board’s investigation and that it will remain an overhang on shares near term.
Ives wrote: “On the heels of last week’s Blue Tidal Wave this will also increase momentum for more regulatory scrutiny in the Beltway especially around China and chip restrictions at a time the AI Arms Race is heating up into its next gear between the US and China.”
Nvidia’s stock slid US$14.27 to US$172.37. Shares hit an all-time high last month.
