Nvidia shares tumbled as much as 8.8% after its board launched an independent investigation into chief executive Jensen Huang’s relationship with a businesswoman US intelligence agencies suspect of spying for China. For a company whose identity is tied to its founder, the stakes could hardly be higher.
For three years, Jensen Huang has been the face of the artificial intelligence boom. His leather jacket became a symbol of the industry, and his company’s chips became its most valuable commodity. On Sunday, his own board said it would investigate him.
Nvidia’s directors announced that a committee of independent directors, assisted by outside counsel, will examine reports that Huang was the target of a foreign intelligence effort. The board said it had no reason to believe that national security or Nvidia’s secrets had been compromised, but that its inquiry would examine all available information. Huang, the company said, fully supports the review and has committed to cooperating with it.
Hours earlier, Huang had confirmed in a memo to employees that he had an extramarital affair with the woman at the centre of the reports, according to Bloomberg. He apologised to his family and to staff.
How it unfolded
The story began on 29 October, when The New York Times reported that US intelligence agencies believed a businesswoman with a close relationship to Huang had been passing information to Beijing. She was an executive at Megaspeed, a Singapore-based company that had been a significant Nvidia customer. The Financial Times reported similar findings.
According to The New York Times, the US Commerce Department has also been investigating whether Megaspeed, which has close ties to Chinese technology companies, helped firms in China get around American restrictions on advanced chip exports. Megaspeed had been poised to buy about $2 billion of Nvidia’s AI technology over the following year, the newspaper reported.
Nvidia initially dismissed the reports. Huang’s admission on Sunday changed that.
China rejected the allegations. A Foreign Ministry spokesperson, Guo Jiakun, said on Monday that the so-called Chinese spy narrative was unsubstantiated, Reuters reported.
The verdict
Investors did not wait for the investigation’s findings. Nvidia shares opened 7.3% lower on Monday and slid as much as 8.8%, at one point erasing almost $400 billion of market value, according to Bloomberg. The stock touched $170.24, its lowest level since late March. As recently as last Wednesday, it traded above $200, and it reached a record $243.37 in early October.
The timing compounds the damage. Nvidia had already fallen nearly 8% last week, caught in the broader sell-off in AI stocks after Democrats won control of both houses of Congress and investors began pricing in tighter regulation of the industry. The Nasdaq Composite entered correction territory on Thursday.
Huang co-founded Nvidia in 1993 and has led it ever since. Few large companies are so closely identified with one person. Analysts have warned that investors now face a risk that barely existed a week ago: that Nvidia’s founder could lose his job, depending on what the board finds. Even if he stays, the episode could invite closer scrutiny from Washington of Nvidia’s dealings with Chinese and China-linked customers, at a time when its sales to China are already politically sensitive.B
Beyond Nvidia
Nvidia is not just another tech company. Its chips power most of the world’s AI systems, and its share price has become a barometer for the entire AI trade. When Nvidia falls hard, chipmakers and AI-linked stocks in South Korea, Taiwan and Japan tend to follow.
That chain reaction has been working in India’s favour. Global investors pulling money out of AI-heavy markets last week sent ₹38,971 crore into Indian shares, helping lift the Nifty 7.6%. India is seen as a market with little exposure to AI hardware. A prolonged crisis at Nvidia could extend that rotation.
India also has more direct links. Nvidia has partnerships with Indian conglomerates, including Reliance and Tata, to build AI computing infrastructure, and India’s government-backed AI programme relies heavily on Nvidia processors. Any disruption to Nvidia’s leadership or export licences may just disrupt those plans.
The board has not said how long its investigation will take. Until it reports, the world’s most important AI company will be operating under a question mark, and so will a large part of the global stock market that depends on it.
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