Nvidia's board launched an outside investigation after media reports that Jensen Huang had been targeted by a "foreign intelligence effort." In a Sunday statement, the company said Huang backs the process and will cooperate.
The stock moved quickly. At 11:56 AM EST, NVIDIA Corporation was at 176.80, down 9.84 or 5.27 percent.
According to the New York Times and the Financial Times, U.S. intelligence officials allege that Alice Huang of MegaSpeed, a cloud firm, passed information to Beijing. On Monday, China's Foreign Ministry spokesperson Guo Jiakun said the "so-called Chinese spy narrative" was unsubstantiated, Reuters reported.
Huang, Nvidia's co-founder and CEO, told employees he had "fallen short" of his duty to serve people across the world including colleagues, the board, partners, and shareholders. In the same email, he wrote: "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."
The review has investors debating leadership risk. Speaking to CNBC's Squawk Box Europe, Dan Ives of Yorkville Ives & Co., where he serves as senior managing director, said chatter about ousting Huang is "comedy." He called the probe and affair a "game changer," but maintained his belief that in AI chips Nvidia is ahead of China by two to three years. Ives added that the Street likely expects Huang to remain CEO, though a board investigation introduces uncertainty.
Tech shares sank last week as investors rethought data center expansion following Democrats' capture of Congress. On Monday, Asia's tech names rebounded, and U.S. chipmakers including AMD, Marvell, Arm, Intel and Qualcomm also rose.
For now, the fallout looks contained. At Panmure Liberum, investment strategist Joachim Klement said the impact is currently limited to Nvidia. If Huang's position were to be "endangered," he said Nvidia might scale back support for other companies in Asia and the U.S., which could then ripple through more semiconductor names.
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On Sunday, U.S. President Donald Trump praised Huang's leadership but said he had not spoken to him about the investigation.
"I think he's an honorable guy. I think he probably has an excuse for it. You have to hear it," the president told reporters.
"He's done an amazing job for our country," Trump added.
Sequoia partner Shaun Maguire defended Huang on X, calling him "one of the greatest entrepreneurs of this generation," and added: "two mistakes don't make a right, and I believe Jensen is irreplaceable for America's AI leadership." Elon Musk reshared Maguire's post and said he agreed.
Nvidia will release its third-quarter results on Nov. 17 and has a major conference slated for late in the month in Washington, D.C. The bottom line: guidance, any board updates, and signs of customer or partner shifts will set how much this episode matters to your portfolio.
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