Nvidia shares fall after investigation into CEO's affair

Nvidia shares fell by about 6% on Monday after the company announced an independent investigation into chief executive Jensen Huang's affair with an alleged Chinese spy.

The investigation follows reports that US intelligence believed Huang had been targeted in an espionage campaign by China. China has rejected the claims, with its Foreign Ministry saying "allegations about Chinese spies were "entirely groundless, speculative and intended to smear and malign China".

Nvidia said it had no reason to believe the company's secrets or national security were compromised. The company's board of directors said it would begin an investigation in "light of recent reporting that founder and chief executive Jensen Huang has been the target of a foreign intelligence effort".

US intelligence officials believe Alice Huang, also known as Huang Le, was a spy for Beijing, according to a New York Times report. The report said Secretary of State Marco Rubio sent a memo to top officials in Washington last spring warning that the Nvidia boss was in a close relationship with a Chinese spy. Alice Huang was managing director of Singaporean company Megaspeed, which has had dealings with Nvidia.

Huang admitted he was "unfaithful" to his wife and apologised for hurting her and their children. He added he was "committed to protecting Nvidia and supporting America's national security" and would cooperate with the investigation.

Following the probe announcement, other big tech bosses, including Elon Musk, came out in support of Huang to continue leading the firm. US President Donald Trump said the Nvidia boss was an "honourable guy".

The news of the investigation sparked a sell-off in Nvidia's shares, with about $250bn (£190bn) wiped off the company's value.

Analysts suggested the hit to the company would be shortlived. Victoria Fernandez, chief market strategist at Crossmark Global Investments said investors would not abandon Nvidia, because the chipmaker was so central to the AI industry. "Nvidia is the core of this AI trade, and without them, all these other pieces start to fall apart because the financing's not there," she told the BBC.

Huang co-founded Nvidia, which is central to making the hardware for emerging AI technologies, with two other engineers in 1993. Its chips were initially designed for gaming, but Huang decided to turn its focus on AI development, turning it into the world's second most valuable company.

A key concern for investors is what would happen to Nvidia if Huang was removed from the company, as Fernandez said there was "no natural successor" to the chief executive. Huang owns only around 3.5% of the company, and Nvidia operates on a single class voting structure, meaning his stake would not be enough to act as a veto power over any board decision.

Fernandez said she does not believe the board will remove Huang as chief executive, unless there is glaring evidence of wrongdoing related to national security or intellectual property, "but I bet they start bringing someone up as his number two, to have there for the future."

Nvidia chips have been a major focus of the AI race between the US and China and the White House has previously imposed controls on where its advanced products can be sold. The H200, Nvidia's second most advanced semiconductor, had previously been restricted by Washington over concerns that it would give China's technology industry an edge over the US. But Huang has been against restricting the sale of Nvidia's chips to China, arguing that it would be better for the global rollout of AI to be powered by US technology. In January, the Trump administration said it would allow the company to sell its H200 chips to Chinese customers under certain conditions.

Sources

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.