Nvidia shares drop after CEO Jensen Huang admits affair with suspected Chinese spy; what it means for company
Nvidia shares declined in after-hours trading on Monday following the announcement of an internal investigation to find out if the company’s chief executive Jensen Huang had been targeted by a foreign intelligence operation. The investigation has raised questions about Jensen Huang’s future at the AI chipmaker which is among the most valuable listed companies in the world.Announced on Sunday, the investigation has drawn attention to Huang’s position at Nvidia, the world’s most valuable chipmaker. His future is also under scrutiny because of his prominent role as one of the leading salesmen of the artificial intelligence boom.Jensen Huang, 63, has headed Nvidia since he established the company in 1993 alongside Chris Malachowsky and Curtis Priem. His long tenure makes him one of Silicon Valley’s longest-serving chief executives among company founders.Born in Taiwan and brought up in the US, Huang emerged as a key figure in the artificial intelligence revolution. He steered Nvidia from its original business of manufacturing graphics chips for video games to becoming the world’s leading supplier of AI processors.
Jensen Huang & the ‘Chinese spy’ scandal
The company launched the internal inquiry following a media report alleging that Huang had a close association with a Chinese businesswoman who had allegedly shared information with Beijing. In a message to Nvidia employees, Huang acknowledged that he had been unfaithful to his wife but did not provide details about the relationship.The New York Times reported last month that Huang had been involved in a relationship with Alice Huang, a former executive at Singapore-based company Megaspeed who is not related to him. US authorities investigated Alice Huang and concluded that she was an asset of Chinese intelligence.Megaspeed’s website identifies the company as an Nvidia Cloud Partner in the Asia-Pacific region. It also lists Nvidia’s GB200 NVL72 and HGX H100 chips among the products it offers.The developments also had repercussions in South Korea. Madison Huang, Jensen Huang’s daughter and an Nvidia executive, called off a scheduled visit to Seoul for an Nvidia conference due to begin on Monday, according to companies that had been due to meet her.Madison Huang had been scheduled to visit South Korean artificial intelligence startup Rebellions and participate in a question-and-answer session with Kakao Mobility. Rebellions said both engagements had been called off because of “unavoidable internal circumstances at Nvidia.”South Korean media reported that Nvidia AI Day Seoul, a two-day conference expected to attract around 2,000 participants, would go ahead as scheduled. The event is set to focus on physical AI, agentic AI and infrastructure. Nvidia did not immediately respond to a request for comment.
Impact on Nvidia and its shares
According to a Reuters report, trading in perpetual futures on the Hyperliquid exchange, along with after-hours share transactions on the Blue Ocean system, indicated that Nvidia shares were changing hands at around $178.60. This is a decline of more than 4% from the stock’s closing price of $186.64 on the Nasdaq on Friday.Nvidia’s chip technology has played a central role in several major shifts in the technology industry, spanning video gaming, autonomous vehicles, cloud computing and artificial intelligence.Huang’s early decision to invest in AI proved significant. By the time ChatGPT was launched in late 2022, Nvidia’s processors were already central to the computing infrastructure needed to meet the rapidly growing demand for AI applications.The company’s market value has since climbed sharply, making it one of the world’s most valuable businesses and an essential supplier to leading technology companies. Nvidia’s valuation rose from $420 billion in late 2022 to $4.5 trillion as of November 6.“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 centres,” Chris Weston, head of research at brokerage Pepperstone in Melbourne told Reuters.However, Weston said he did not expect Huang, whom he described as the “godfather of AI”, to 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.The scrutiny of Huang’s relationship with Alice Huang has emerged at a sensitive point for Nvidia. Investors are already questioning whether the AI boom that fuelled the company’s extraordinary growth can be sustained. The board’s investigation has added another layer of uncertainty by raising questions about the future of the executive most closely linked to Nvidia’s success.The issue has also drawn attention from senior Republicans in the US House of Representatives, who have sought briefings from Huang following The New York Times report, pointing to concerns over national security.Nvidia has maintained that its board has “no reason to believe” that US national security or company secrets were compromised. However, an independent committee of directors will examine all the information available as part of its review.Analysts cautioned that an extended investigation or internal review could affect Nvidia’s investment decisions and product launches, potentially creating wider repercussions for the semiconductor industry.Ryu Young-ho, a senior analyst at NH Investment & Securities, said competitors such as Advanced Micro Devices (AMD) could receive increased attention in the near term. This could also bring Samsung into greater focus because of its close business ties with AMD.However, Ryu said Nvidia’s products would be difficult to replace, which could limit the overall impact of the developments. He added that shipments to China might face further delays, depending on how the situation unfolded.South Korea’s deputy science minister said on Monday that the government did not expect any disruption to deliveries of Nvidia graphics processing units covered by existing contracts, despite the challenges currently confronting the company.Shares of Nvidia’s major Asian chip suppliers recovered on Monday following last week’s selloff in AI-related stocks. Taiwan Semiconductor Manufacturing Company (TSMC) rose 6.5%, while Samsung Electronics gained 2.9% and SK Hynix advanced 4.7%.Several prominent personalities also commented on Huang’s admission. Billionaire investor Bill Ackman, who founded Pershing Square Capital Management, described the Nvidia chief executive as an “incredible human” in a post on X. However, he added that 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 added.Tesla CEO Elon Musk responded with “I agree” to a post by Sequoia partner Shaun Maguire. Maguire had said Huang “did something incredibly dumb” that was “bad for America”, while also maintaining that “Jensen is irreplaceable for America’s AI leadership”.US President Donald Trump said on Sunday that he had not discussed the allegations with Huang. He nevertheless described the Nvidia CEO as a fine person. “I hope everything’s fine. He’s done such an incredible job,” he added.Asked whether he believed he should have acted on the intelligence after being briefed about it, Trump said: “No, I don’t think so. I think he’s an honorable guy. I think he probably has an excuse for it. You have to hear it.”The New York Times reported that Trump had been briefed on the intelligence findings approximately a year ago but decided against taking action based on the information.
