The Nvidia stock is under fresh pressure after the company lost about US$430 billion in market value over two sessions. The controversy escalated on several fronts on Tuesday. The central question now is whether Jensen Huang’s personal conduct has become a governance risk for Nvidia.
How Far Has Nvidia Stock Fallen Since the Affair Broke?
Nvidia’s stock had been nearly flat this year before news of the affair broke. It has since fallen 9.5%.
The shares have also lagged the broader market. Investors are uneasy over whether massive spending on AI will deliver adequate returns.
What Did Nvidia’s Board Do Over the Jensen Huang Affair?
The board retained Joon Kim, a Wachtell Lipton partner and former acting US Attorney for the Southern District of New York. His practice covers internal investigations and white-collar defence.
Nvidia said its board has no reason to believe US national security or company secrets were compromised. Huang has committed to cooperating with the internal review.
Huang apologised to top executives at a closed-door meeting on Monday before pivoting to business. He was back holding meetings at Nvidia’s headquarters on Tuesday, CNBC reported.
Huang told employees he was unfaithful to his wife but gave no details about the relationship.
Why Does Jensen Huang’s Control Matter to Shareholders?
Huang has led Nvidia for more than three decades and built it into the dominant supplier of AI chips. He owns about 3.6% of the company but does not have majority voting control.
Nvidia runs an unusually flat organisation in which dozens of executives report directly to him. That dependence is why the allegations have turned his personal conduct into a broader risk.
The FBI is separately examining whether the 63-year-old Huang was targeted by a foreign intelligence operation. China’s foreign ministry has called the spy accusations ‘groundless’.
Who Is Alice Huang and How Many Chips Are Involved?
Alice Huang, also known as Huang Le, built a network of companies across China and Singapore with her husband and sister, according to The Information. Allegations say her ties to Nvidia’s CEO aided at least US$7.5 billion in Nvidia chip shipments to China.
When orders for chips subject to US export restrictions stalled, she used her Nvidia ties to secure supplies. She helped move about 240,000 H100, H200 and some A100 chips into China.
Some of the chips ultimately served Alibaba, Tencent and smaller Chinese AI labs. Reuters could not determine her whereabouts to seek comment.
She is the controlling shareholder of Singapore-based cloud-computing company Megaspeed International. Megaspeed is linked to Century Litong, which secured preferred cloud partner status with Nvidia in 2023, giving it priority access to chips.
The Financial Times reported that several US government agencies pushed for Megaspeed to join the entity list. The US Commerce Department delayed those efforts, and the company remains off the list.
When Did Trump Learn About the Huang Allegations?
The New York Times reported that Marco Rubio briefed President Donald Trump aboard Air Force One en route to China in May. The briefing marked at least the second time in seven months that Trump had been told about the intelligence.
Trump said Huang told him he had ‘absolutely no idea’ the woman was a spy, and that he believed the Nvidia CEO. Trump also said he had not known about the alleged ties when Huang accompanied him to China in May.
A White House official disputed the Times report. Axios, citing sources, reported that Commerce Secretary Howard Lutnick was sent a highly classified memo on the relationship. Reuters could not verify that report.
Senate Democratic Leader Chuck Schumer demanded answers and tighter curbs on chip exports to China. He said Trump is ‘supposed to protect America, not China, not his friends’.
What Should Nvidia Shareholders Monitor Next?
Four checkpoints are worth monitoring:
- The findings of the internal review led by Joon Kim
- Whether lawmakers approve new restrictions on US chip exports to China
- Any Commerce Department decision on adding Megaspeed to the entity list
- The outcome of the FBI’s examination of whether Huang was targeted
Huang’s 3.6% stake alone does not give him control, so the board’s review will carry much of the weight. Nvidia is not listed on Bursa Malaysia, so Malaysian investors would need a broker with US market access. Compare fees carefully before opening an account, using our Trading Account Types in Malaysia guide.
Key Takeaways
- Nvidia shed about US$430 billion in market value over two sessions, and the stock is down 9.5% since the affair broke.
- Jensen Huang owns about 3.6% of Nvidia and does not have majority voting control.
- Alice Huang allegedly helped move about 240,000 H100, H200 and some A100 chips into China.
- The internal review, FBI examination and the Megaspeed entity-list decision are the next checkpoints.
Disclaimer: This article is for general information only and is not investment advice. Do your own research before making any investment decision, and consider your own risk profile.
Frequently Asked Questions
Why did Nvidia stock fall after the Jensen Huang news?
Nvidia shed about US$430 billion in market value over two sessions as questions about Jensen Huang’s relationship deepened. The stock has fallen 9.5% since the affair broke, after being nearly flat earlier this year.
How much of Nvidia does Jensen Huang own?
Huang owns about 3.6% of Nvidia but does not have majority voting control. He has led the company for more than three decades.
Who is leading Nvidia’s internal investigation?
The board retained Joon Kim, a Wachtell Lipton partner and former acting US Attorney for the Southern District of New York, to lead the probe. Independent directors hired outside counsel to investigate.
Has Nvidia said US secrets were compromised?
Nvidia said its board has no reason to believe US national security or company secrets were compromised. Huang has committed to cooperating with the internal review.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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