Nvidia and Jensen Huang Face Shareholder Lawsuit Over Alleged Chinese Spy Affair

Nvidia and CEO Jensen Huang face allegations of misleading investors in a shareholder lawsuit tied to a Chinese espionage controversy involving the $4.3tn (£3.2tn) semiconductor giant.

The lawsuit follows President Donald Trump’s statement that the FBI is investigating Huang’s relationship with an alleged Chinese intelligence operative.

Filed in California federal court, the complaint alleges that Nvidia and Huang failed to inform shareholders about the executive’s rumored relationship with Alice Huang, a former executive at Singapore-based Megaspeed and no relation to Jensen Huang.

The suit contends that neither party disclosed national security risks linked to the relationship, which allegedly endangered Nvidia’s reputation and commercial outlook.

The New York Times previously reported on the alleged relationship, stating that U.S. authorities believe Alice Huang is a Chinese intelligence asset.

In a statement to the New York Times last month, Nvidia characterized Huang’s interactions with Alice Huang as “not unusual or unexpected,” noting that “meetings with customers are part of a CEO’s job; Jensen talks with thousands of customer executives every year.”

On Sunday, Huang acknowledged being “unfaithful” to his wife, though he did not name the individual involved.

The complaint alleges that the New York Times report was “materially false and misleading” because Jensen Huang had indeed been involved with Alice Huang.

The filing further accuses Nvidia of making false and misleading statements regarding its ties to Megaspeed, a firm under investigation for allegedly diverting Nvidia chips to China in violation of U.S. export controls.

In an October 30 interview, Huang stated, “we’ve studied all their [Megaspeed] deployments of our GPUs and counted every one,” adding, “And I think the US government also has as well.”

Megaspeed said in a statement last year that it operated “fully in compliance with all applicable laws, including US export control regulations.”

Nvidia announced Sunday that it would launch an independent investigation into reports that Huang was the “target of a foreign intelligence effort.” The company’s shares fell 4.3% on Monday, wiping roughly $190bn off its market value. The lawsuit was filed five minutes after U.S. markets closed.

Neither Nvidia nor Megaspeed immediately responded to requests for comment regarding the lawsuit.

Huang co-founded Nvidia in 1993 and has guided the California-based firm to become the world’s most valuable chipmaker, establishing him as a leading symbol of the artificial intelligence boom.

Shareholder lawsuits often follow sharp stock declines. Nvidia investors, led by retail shareholder Mark Kistenmacher, are seeking unspecified damages in this class action, a legal mechanism where one or several individuals sue on behalf of a larger group.

Multiple U.S. law firms have launched investigations into whether Nvidia misled investors and are soliciting shareholder input.

On Monday, Trump said the FBI is investigating Huang’s affair but expressed that he did not believe the executive had cause for concern.

“I know the FBI is looking into it in terms of something else, and I think that he’ll be in good shape,” Trump said during a White House briefing.

“I did speak to him today just to see if he’s feeling all right, how you’re doing,” Trump said. “He said he had absolutely no idea that the person in question was a spy.”

In an open letter published on Nvidia’s website, Huang wrote: “I support the investigation and will cooperate fully. I love our country and our company. I am committed to protecting Nvidia and supporting America’s national security.”

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