Nvidia shares experienced a significant decline on Monday following an internal inquiry regarding the potential targeting of CEO Jensen Huang by a foreign intelligence operation, casting doubt on his future with the AI chipmaker. The internal investigation was initiated subsequent to a media report indicating that Huang maintained a close association with a Chinese businesswoman, who is purported to have relayed information to Beijing. Huang informed Nvidia’s employees of his infidelity regarding his marriage, though he refrained from providing specifics about the relationship. The investigation, announced on Sunday, has drawn attention to Huang’s future in light of Nvidia’s position as the world’s most valuable chipmaker and the CEO’s role as a leading figure in the AI boom’s commercial success. The leather-jacketed Huang enjoys a level of fame akin to that of a rock star on a global scale, especially in Asia, where he frequently engages with his admirers, capturing selfies and signing autographs for his loyal supporters. The fallout from the probe extended to South Korea, where Madison Huang, daughter of Huang and an executive at Nvidia, cancelled a planned visit to Seoul for an Nvidia conference that was set to begin on Monday, according to companies she had been scheduled to meet.
Nvidia’s shares experienced a decline of over 6% during trading in Frankfurt, continuing the downward trend observed last week and resulting in the stock reaching new multi-month lows. At those levels, the chipmaker faced a potential loss of approximately $270 billion from its closing price on Friday, as per LSEG Datastream. “The market’s probably telling you now this does no favours to the stock whatsoever in a time when there’s a lot of conjecture as to the build-out of data centres,” said Chris Weston. Weston expressed scepticism regarding the notion that Huang, whom he referred to as the “godfather of AI,” would be supplanted. “If we genuinely thought he was going to step down … the stock would be down – it would be an absolute bloodbath, to be honest,” he said. Source reported last month that Huang had a relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed, who US authorities investigated and concluded was a Chinese intelligence asset. “The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear,” Chinese Foreign Ministry spokesperson Guo Jiakun told.
Megaspeed did not provide an immediate response to a request for comment on Monday, which was a public holiday in Singapore. Shares in Nvidia’s key Asian chip suppliers TSMC, Samsung Electronics and SK Hynix experienced a rebound on Monday following the previous week’s selloff of AI-related stocks. TSMC shares experienced a notable increase of 6.5%, whereas Samsung and SK Hynix saw their shares rise by 2.9% and 4.7%, respectively. Some prominent figures weighed in on Huang’s admission. Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, said on X that the Nvidia CEO was an “incredible human,” but if “indeed this is more than an affair, then it is obviously a real problem.” Source reported that Trump was briefed about the intelligence findings roughly a year ago and opted not to take any action regarding the information. Madison Huang had originally intended to visit the South Korean AI startup Rebellions and conduct a question-and-answer session with Kakao Mobility. Rebellions stated that the events were cancelled owing to “unavoidable internal circumstances at Nvidia.”
Nvidia AI Day Seoul, a two-day event anticipated to attract approximately 2,000 attendees to engage in discussions on physical AI, agentic AI, and infrastructure, will take place as scheduled, as reported. Analysts indicated that an extended investigation or internal review might hinder Nvidia’s investment decisions or product launches, carrying wider ramifications for the semiconductor sector. Ryu Young-ho indicated that Nvidia’s competitors, such as Advanced Micro Devices, may garner increased attention in the near term, which could elevate Samsung, given its close business relationship with AMD, into the limelight. He stated that Nvidia’s products would be challenging to substitute, thereby constraining the potential impact. However, shipments to China might encounter additional delays based on the evolution of the situation.
