Nvidia shares plunge 8% as board probes alleged China spy operation targeting CEO Jensen Huang
Nvidia shares plunged more than 8 per cent at the opening bell on Monday, extending last week's sell-off, after the chipmaker announced an independent investigation into an alleged foreign intelligence effort targeting CEO Jensen Huang. The stock, however, recovered some of its losses to trade around 4 per cent lower later in the session.
Nvidia shares fell to $171.80 each when trading began in the US on Monday, but later recovered to around $177.85, regaining some of their earlier losses. The development has raised questions about Huang's future at the company he co-founded more than three decades ago and his central role in its growth.
The sharp fall in Nvidia shares came even as broader US markets recovered from last week's losses, with technology stocks and lower crude oil prices supporting Wall Street.
Major US stock market indices rose on Monday, with the Nasdaq Composite gaining 1.4 per cent and the S&P 500 rising 1.1 per cent. The Dow Jones Industrial Average climbed 606 points, or 1.2 per cent, as of 9.35 am Eastern time.
Shares of major technology companies, including Apple, Meta, Alphabet and Microsoft, rose by as much as 5 per cent during early trading. Alphabet's parent company and other AI-related stocks also contributed to the broader market recovery.
Crude oil prices fell more than 4 per cent amid hopes of diplomatic progress towards ending the US-Iran conflict. The decline in oil prices provided additional support to US equities.
Also read | China dismisses spy plot claim involving Nvidia CEO Jensen Huang as smear campaign
Why has Nvidia launched an investigation into Jensen Huang?
Nvidia's board announced on Sunday that it had initiated an independent investigation following reports that Huang had been targeted by a foreign intelligence operation.
The probe follows a report by The New York Times last month about Huang's relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed.
US authorities reportedly investigated Alice Huang and concluded that she was a Chinese intelligence asset suspected of gathering information for Beijing. China has rejected the allegations.
Huang acknowledged in an email to Nvidia employees on Sunday that he had been unfaithful to his wife, without providing details about the relationship.
"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," he wrote.
Nvidia's board said it had launched the investigation "in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort".
The board also expressed confidence in Huang, stressing that US national and economic security remained its priority.
China's Foreign Ministry spokesperson Guo Jiakun rejected the allegations, describing the narrative of a Chinese spy operation as a "groundless accusation, slander, and a smear".
What is at stake for Nvidia and its leadership?
The investigation has put the spotlight on Huang's future at the company, which he co-founded more than three decades ago.
Huang owns approximately 3.6 per cent of Nvidia and is its fifth-largest shareholder, according to LSEG data. He also exercises considerable influence through an organisational structure in which dozens of senior executives report directly to him.
Unlike some major technology companies, Nvidia does not have a dual-class share structure that gives its founder majority voting control.
Analysts have pointed out that the company has no obvious successor who could immediately take over Huang's responsibilities if he steps down. However, an immediate leadership change is not widely expected, particularly as Nvidia's board has reiterated its confidence in him
US President Donald Trump said on Sunday that he had not spoken to Huang about the allegations but described him as an honourable person and praised his contribution to the technology industry.
Billionaire investor Bill Ackman also expressed support for Huang, while noting that any evidence of a national security risk would be a serious concern.
Also read | Why probe against Nvidia CEO Jensen Huang could put pressure on global stock market sentiment
Nvidia's Asian suppliers recover despite share slump
While Nvidia shares came under pressure, some of its major Asian suppliers recovered on Monday following last week's sell-off in artificial intelligence-related stocks.
Taiwan Semiconductor Manufacturing Company (TSMC) closed 4.7 per cent higher, while Samsung Electronics gained 0.6 per cent and SK Hynix rose 0.4 per cent.
The developments also affected Nvidia's planned engagements in South Korea. Madison Huang, Jensen Huang's daughter and an Nvidia executive, cancelled a scheduled visit to Seoul for an Nvidia conference.
Her planned meetings with South Korean companies, including AI startup Rebellions and Kakao Mobility, were called off due to what Rebellions described as "unavoidable internal circumstances at Nvidia".
However, Nvidia AI Day Seoul, a two-day event expected to attract around 2,000 participants, was set to proceed as planned.
South Korea's deputy science minister said the government did not expect the investigation to disrupt contracted deliveries of Nvidia graphics processing units (GPUs).
Analysts have cautioned that a prolonged internal review could affect Nvidia's investment decisions and product launches. Rivals such as Advanced Micro Devices (AMD) could also attract greater attention in the short term.
However, Nvidia's products remain difficult to replace, limiting the immediate impact on the broader semiconductor industry.
Investors will closely watch the outcome of the investigation and any potential implications for Huang's leadership as the company navigates the controversy.