Nvidia Shares were down about 5% in premarket trading Monday after the tech giant launched an investigation into CEO Jensen Huang’s relationship with a businesswoman who intelligence agencies say is a Chinese spy.
U.S. intelligence agencies said Alice Huang, an executive at cloud company Megaspeed, passed information to Beijing, according to reports in the New York Times and Financial Times.
Nvidia said its board launched an independent investigation following reports that Huang was the target of a “foreign intelligence effort.”
Huang “fully supports the review and is committed to cooperating with it,” the company said in a statement on Sunday.
The co-founder and CEO told staff in an email that he had “failed to fulfill” his responsibility to serve his colleagues, the board, partners and shareholders around the world.
“I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,” Huang said in the email.
Chinese Foreign Ministry spokesman Guo Jiakun said on Monday that the “so-called Chinese spy narrative” was unfounded, Reuters reported.
Nvidia was last trading down 5.2% in premarket trading.
Nvidia has been sharing since the beginning of the year.
Nvidia’s leadership under scrutiny
The key question for investors will be whether Huang remains CEO, according to Dan Ives, senior managing director at Yorkville Ives & Co.
“This is a dark moment for Jensen and will at a minimum trigger several congressional investigations and create overhang in the stock for a myriad of reasons,” Ives said in a Sunday note.
“There is clearly a risk that Jensen could be removed as CEO based on the Board’s investigation, which will add risk to the stock because it is so important to Nvidia’s story and strategy globally. It will also increase scrutiny regarding the sale of chips to China, which remains a key issue on the battlefield in Washington,” Ives added.
Tech stocks were hit hard last week as investors reassessed data center construction after Democrats took control of Congress.
Asian technology stocks rose across the region on Monday, rebounding from Friday’s losses. Shares of U.S. chipmakers were slightly lower in premarket trading, with Intel, Wonderful, Qualcomm And Arm all down more than 1%.
Joachim Klement, investment strategist at Panmure Liberum, said the impact is currently limited to Nvidia.
But if Huang’s position is “in danger,” then “Nvidia could reduce its support for other companies, whether in Asia or the United States, which could then spread a little more to other semiconductor names,” he said.
Support for Huang
U.S. President Donald Trump on Sunday praised Huang’s leadership but said he had not spoken to the CEO about the investigation.
“I think he’s an honorable man. I think he probably has an excuse for that. You need to hear it,” the president told reporters.
“He’s done an incredible job for our country,” Trump added.
Shaun Maguire, a partner at Sequoia, also defended the tech giant’s CEO, saying in an article on X that Huang is “one of the greatest entrepreneurs of this generation.”
He added: “Two wrongs don’t make a right, and I believe Jensen is irreplaceable to America’s leadership in AI. »
EspaceX And Tesla CEO Elon Musk shared Maguire’s post, adding that he agreed with the venture capitalist’s statements.
Nvidia will report its third-quarter results on November 17 and will hold a major conference in Washington, DC, at the end of the month.
— CNBC’s Kif Leswing and Kamaron McNair contributed to this report.
Gn bussni
