Nvidia shares drop 5% after probe launched into Huang's ties with alleged Chinese spy
The investigation concerns reports that Huang may have been targeted by a foreign intelligence operation
Nvidia's board of directors has initiated an independent review of CEO Jensen Huang's relationship with a businesswoman whom U.S. intelligence agencies consider a Chinese spy. Nvidia shares fell by 5.2% in premarket trading. The CEO stated that he supports the investigation and will cooperate with it.
U.S. intelligence agencies claim that Alice Huang, the head of cloud company Megaspeed, passed information to Beijing. Chinese Foreign Ministry spokesperson Guo Jiakun called this version unfounded.
Huang also admitted in a letter to employees that he had violated marital fidelity and apologized to his wife and children. Investors are now assessing whether he will retain his position as head of Nvidia. Senior Managing Director of Yorkville Ives & Co. Dan Ives believes the investigation could increase pressure on the stock, raise the risk of Huang's removal, and draw additional attention to chip sales in China.
Investment strategist at Panmure Liberum, Joachim Klement, stated that the consequences are currently limited to Nvidia. In his assessment, if Huang's position is threatened, the company may reduce support for other firms in the U.S. and Asia, which could impact other semiconductor manufacturers' stocks.
U.S. President Donald Trump praised Huang's work but said he had not discussed the investigation with him. Sequoia partner Shawn Maguire also expressed support for the CEO, and Elon Musk agreed with his assessment. Nvidia is set to release its third-quarter report on November 17 and will hold a major conference in Washington at the end of November.
