Nvidia shares fall as its board investigates CEO Jensen Huang over spy reports

Nvidia‘s board has opened an independent investigation into its own chief executive, Jensen Huang, after reports that he was the target of a Chinese intelligence operation. In an email to staff, Huang admitted he had been unfaithful to his wife and said he had “fallen short” of his responsibility to employees, partners and shareholders. The company that sells the chips behind almost every large AI system now has to show how much of its value rests on one man.

That question reaches well beyond Santa Clara. Nvidia is one of the most valuable companies in the world, it ranks among the largest holdings in the index funds inside millions of pension and retirement accounts, and its processors set the pace and the price of the data-center buildout. Huang is the only chief executive the company has ever had. When he comes under a board inquiry, savers who never chose to buy the stock carry part of the risk.

What Nvidia’s directors say they will examine

A committee of independent directors, assisted by outside counsel, will oversee the review, according to the board’s statement. The directors said they had “no reason to believe that either national security or NVIDIA secrets were compromised,” but that the inquiry “will examine all available information.” Huang said he supports the investigation and will cooperate fully, and a spokesperson said he is committed to leading the company “without interruption.”

The reports behind it came from The New York Times and the Financial Times, which said US intelligence agencies had concluded that Alice Huang, a former executive at the Singapore data-center company Megaspeed, had been recruited by China’s Ministry of State Security. The two are not related. Megaspeed, one of Nvidia’s biggest customers in Southeast Asia, bought more than $4.8 billion of Nvidia chips over two years, according to the Times, and has been accused of helping restricted Chinese companies obtain them. Huang’s email did not name the woman. China’s foreign ministry called the spy allegations unsubstantiated and a smear against China.

A board that backs Huang before it has a finding

The reassurance and the inquiry arrive in the same statement, which also says the board has “confidence in Jensen and his leadership team” before any finding exists. It sets no timetable and does not say whether the results will be published. The intelligence claims rest on officials who spoke anonymously to newspapers and have not been tested in public. Huang’s own account has also moved: he had previously described his dealings with Alice Huang as related to Megaspeed and “completely normal and not unusual,” a description his email now complicates.

Investors moved before the US open. Shares in the company, valued at close to $4.5 trillion on Friday according to NBC News, were down 4.8% in premarket trading on Monday from Friday’s close of $186.64, CNBC reported, after a 9.3% fall on Thursday in a wider chip sell-off. Dan Ives of Yorkville Ives & Co. told CNBC that talk of replacing Huang was “comedy,” but added that with a board investigation “anything could happen.” Joachim Klement, an investment strategist at Panmure Liberum, said the damage was contained to Nvidia for now, but warned that if Huang’s position were endangered the company might cut back its support for partners in Asia and the US, spreading the hit to other chipmakers. Asian technology stocks rose on Monday.

Congress had already moved. Three House committee chairs asked Huang last week to attend a closed-door briefing on his interactions with Alice Huang and on Nvidia’s safeguards against foreign espionage. “It is vital that Congress determines the extent to which U.S. national security has been placed at risk,” their letter said. For buyers outside the United States, nothing changes yet: the review is a US corporate and security matter, and Nvidia’s most advanced chips were already largely barred from sale to China under American export controls.

Nvidia reports third-quarter results on November 17, the first scheduled chance for analysts to question management about the inquiry, and Huang is due before the House chairs on November 18. The company also hosts a major conference in Washington at the end of the month.

Nvidia has had one chief executive for more than three decades. Its independent directors now have to decide whether that is the company’s edge or its single largest exposure, and they have not said when they will answer.

Tags: nvidia, Jensen Huang, AI chips, corporate governance, national security, Megaspeed