Nvidia Stock Drops Following Internal Probe Into CEO Jensen Huang’s Conduct

Huang acknowledged an extramarital affair but denied any breach of corporate security as a Chinese intelligence inquiry impacts the $4.5 trillion AI leader.

Nvidia shares experienced a significant decline in early trading following the launch of an internal investigation into whether CEO Jensen Huang was targeted in a Chinese intelligence operation.

The news of the probe into the California-based semiconductor giant caused its stock to drop by more than 4 percent at the market open, even as broader tech indexes and US financial markets showed gains.

The investigation follows reports that Huang maintained a close personal relationship with a Chinese executive at a partner company, who is alleged to have funneled information to Beijing. In an internal memo to staff, Huang admitted to infidelity but provided no further details regarding the nature of the relationship.

“NVIDIA’s Board of Directors has initiated an independent investigation. I support the investigation and will cooperate fully,” Huang stated in the letter.

The company announced the probe on Sunday, stating: “The Board prioritizes U.S. national and economic security, which is paramount to the interests of NVIDIA and its shareholders.”

“While the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board’s inquiry will examine all available information.”

The inquiry casts uncertainty on Huang’s leadership at the $4.5 trillion firm. According to LSEG data, Huang is Nvidia’s fifth-largest shareholder with a 3.6 percent stake. Unlike executives at companies such as Meta or SpaceX, the Nvidia co-founder does not possess majority voting control.

Despite Nvidia’s downturn, the tech-heavy Nasdaq rose 2.7 percent in early trading. Microsoft climbed 2.2 percent, while AMD saw shares surge over 10 percent following an upgrade and a new deal with Google. Amazon also saw gains of 3.8 percent.

The Dow Jones Industrial Average and the S&P 500 rose by 1.7 percent and 2.1 percent, respectively.

Huang’s future

Market analysts expressed skepticism that the current controversy will result in Huang’s departure.

“Founder-led companies often outperform because a single individual drives the vision,” Michael Monaghan, portfolio manager of the Founders 100 ETF, told Al Jazeera.

“Based on the current information, I would see his removal as highly improbable.”

This is not the first time Huang’s personal connections have faced scrutiny. In October, The New York Times reported that the CEO had a relationship with Alice Huang, a former executive at the Singapore-based firm Megaspeed. The two are unrelated.

Megaspeed, a cloud computing and data center firm, identifies as a “core business partner of NVIDIA’s computing power cloud business in the Asia-Pacific region” on its official website.

While US authorities concluded that Alice Huang acted as a Chinese intelligence asset, the Chinese government has dismissed the claims.

“The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear,” Chinese Foreign Ministry spokesperson Guo Jiakun told reporters in Beijing.

These developments coincide with a volatile week for AI investors. Following the US midterm elections, candidates running on anti-AI platforms saw significant success. The Democrats, who maintain a more critical stance toward the AI industry than Republicans, have secured control of both the House and the Senate.

Furthermore, nearly all ballot measures aimed at restricting the construction of new data centers across the US were approved, causing a temporary dip in major AI stocks late last week.

“Jensen faces two fronts of opposition in Washington: China hawks pushing for export restrictions, and those attempting to halt data center expansion. The longer this situation persists, the more influence these groups gain,” Monaghan told Al Jazeera.

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