Nvidia’s stock price fell in early trading Monday amid questions about CEO Jensen Huang’s future at the chipmaker following the board’s decision. investigation over allegations that China targeted him as part of an intelligence operation.
The investigation raises concerns about Huang’s role at the company, which he co-founded and helped build into the world’s second-most valuable company, with a valuation of $4.5 trillion. Nvidia is barred from selling its high-end chips, specially designed to power artificial intelligence models, to China due to competition concerns.
Nvidia shares fell $10.40, or 5.7%, to $176.24 shortly after markets opened.
The allegations revolve around reports that Huang had a close relationship with Alice Huang, who U.S. intelligence officials say was a spy for China’s Ministry of State Security, the country’s main intelligence agency. On Sunday, Nvidia’s board announced the opening of an “independent investigation” into the allegations, sparking questions about the CEO’s future at the company.
“This is a black moment for Jensen and will at a minimum trigger several congressional investigations and create overhang in the stock for a myriad of reasons,” Dan Ives, technology analyst at Yorkville Ives, said in a research note. “The key question investors will be asking is: Will Jensen remain CEO of Nvidia?”
Ives added: “There is clearly a risk that Jensen could be removed as CEO based on the board’s investigation, and that will add risk to the stock because it is so important to Nvidia’s story and strategy globally.”
Nvidia did not immediately respond to a request for comment.
The Chinese government has rejected allegations that it targeted Nvidia’s CEO, who co-founded the company in 1993, in an espionage operation. “The so-called Chinese spy story is completely baseless and constitutes slander and defamation,” Guo Jiakun, a spokesperson for China’s Foreign Ministry, said in a statement.
Another blow to the AI business
The scandal is putting increased pressure on Nvidia’s shares, which have already been battered by growing investor concerns about the valuations of companies driving AI growth. Before Monday’s early decline, Nvidia shares had fallen nearly 20% over the past month, amid a massive selloff in AI stocks.
The board’s investigation into Huang could threaten Nvidia and increase the risk that U.S. regulators will impose additional restrictions on the company’s chip exports, according to Adam Crisafulli, an analyst at Vital Knowledge.
In recent years, Jensen Huang has lobbied federal authorities to relax limits on Nvidia chip sales to China, winning approval from President Trump to sell its H200 chips this year. These chips are not Nvidia’s most advanced models, but they are still considered important products for Nvidia.
Previously, Huang also lobbied Mr. Trump to be authorized to sell Nvidia’s less advanced H20 chips, designed to comply with US export restrictions to China.
“The real potential fallout from the Jensen Huang scandal will be that the US government will impose significantly more draconian restrictions on sales of sophisticated chips to China (the problem is not the H200 but rather the fact that a large amount of high-end Nvidia products are still getting into the hands of Chinese buyers),” Crisafulli said in a research note.
Gn bussni
