Nvidia stock falls after board opens probe into CEO Jensen Huang

Nvidia shares dropped by more than 4 percent in early trading on Monday as investors reacted to a new internal investigation into the conduct of CEO Jensen Huang. The probe examines whether Huang was the target of a Chinese intelligence operation, a development that casts uncertainty over the leadership of the world’s largest chipmaker.

The company confirmed the board of directors launched the independent review on Sunday. In a public statement, the board stated that it prioritizes U.S. national and economic security as paramount to the interests of Nvidia and its shareholders. While the board said it has no reason to believe that national security or Nvidia secrets were compromised, it added that the inquiry will examine all available information.

Huang addressed the situation in a letter to employees. He acknowledged a close personal relationship with a Chinese business executive who allegedly passed information to Beijing. In the letter, Huang admitted to not being faithful to his wife, though he did not elaborate on the specific details of the relationship. He stated that he supports the investigation and will cooperate fully.

The investigation centers on allegations that Huang developed a close relationship with Alice Huang, a former executive at Megaspeed, a Singapore-based data center and cloud computing company. Megaspeed describes itself on its website as a core business partner of Nvidia’s computing power cloud business in the Asia-Pacific region. U.S. authorities investigated and concluded that Alice Huang was a Chinese intelligence asset, although the Chinese government has pushed back against those claims.

Guo Jiakun, spokesperson for the Chinese Foreign Ministry, told reporters in Beijing that the so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear. This dispute over Huang’s personal connections adds a layer of geopolitical tension to the corporate governance process.

Huang is Nvidia’s fifth-largest shareholder, owning 3.6 percent of the company according to LSEG data. However, unlike executives at Meta or SpaceX, the co-founder does not have majority voting control. This lack of absolute voting power has led some analysts to question his long-term position at the helm, particularly given the company’s $4.5 trillion market capitalization.

Michael Monaghan, a portfolio manager for the Founders 100 ETF, told Al Jazeera that founder-led companies often outperform because one person carries the vision. Based on the current information, Monaghan sees Huang’s removal as highly improbable. He noted that Jensen Huang faces two sets of enemies in Washington: China hawks who want the export door shut, and the crowd trying to stop the data center buildout.

The news arrived during a difficult week for artificial intelligence investors on Wall Street. Following definitive results in the U.S. midterm elections, candidates who ran on anti-AI platforms won overwhelmingly. This shift gave Democrats, who are generally more critical of the AI industry than their Republican colleagues, control of both the House and the Senate in the new Congress.

Additionally, all but one of the data center ballot measures seeking to restrict the construction of new facilities across the U.S. passed. These measures sent shares of major AI firms tumbling on Thursday before they rose again on Friday. The market environment remains sensitive to regulatory and geopolitical signals affecting the sector.

Despite Nvidia’s decline, broader tech stocks and wider indexes rose on Monday. The Nasdaq was up 2.7 percent in early trading, with Microsoft rising 2.2 percent and Amazon up 3.8 percent. Chip maker AMD traded up over 10 percent following a new deal with Google and a stock analyst upgrade. The Dow Jones Industrial Average was up 1.7 percent, and the S&P 500 rose 2.1 percent.