Nvidia stock experienced a sharp decline of over 6% during the New York trading session on November 9 (local time), following reports that Nvidia CEO Jensen Huang admitted to an affair with a female executive suspected of having ties to Chinese intelligence.
As of 9:40 a.m. Eastern Time, Nvidia’s stock was trading down 6.17% at $175.12. During the session, the price fell as low as $170.24, marking an intraday drop of up to 8.79%.
The sharp decline is attributed to mounting management uncertainties. Jensen Huang’s personal controversy has escalated into suspicions regarding foreign intelligence activities, prompting the Nvidia board of directors to launch an independent investigation.
Previously, The New York Times reported that Jensen Huang had a relationship with Alice Huang, a former executive at Singapore-based data center firm Megaspeed International, and that U.S. intelligence agencies suspected her of being connected to Chinese intelligence.
Suspicions were also raised that Alice Huang attempted to approach Jensen Huang to gather information regarding Nvidia’s advanced artificial intelligence (AI) semiconductors and U.S. government trends. However, it has not been confirmed whether any actual classified information was leaked.
Jensen Huang addressed employees in a weekend message, admitting to the affair and issuing an apology.
“I have been unfaithful to my wife,” he stated. “My actions have hurt my wife and children, and there is no excuse for what I have done.”
The Nvidia board of directors also issued a statement on December 8 announcing an independent investigation into recent reports that Jensen Huang had been targeted by a foreign intelligence agency.
The board plans to investigate the relevant facts with the support of external legal experts. However, it stated that there is currently no reason to believe U.S. national security or Nvidia’s confidential information has been compromised, and expressed continued confidence in Jensen Huang and the executive team.
The Chinese government has denied the allegations. The Chinese Foreign Ministry released a statement dismissing the espionage allegations as baseless slander.
Dan Ives, senior managing director at Wedbush Securities, analyzed that depending on the board’s investigation results, Jensen Huang could potentially step down as CEO, which would add further pressure to the stock given his heavy influence over Nvidia’s business and strategy.
Jensen Huang co-founded Nvidia in 1993 and has led the company for over 30 years, transforming it into a global AI semiconductor giant. Because his role is vital to Nvidia’s business strategy and relationships with key clients, uncertainties surrounding his leadership are weighing heavily on the stock.
In particular, Nvidia exerts influence across the entire AI industry not only by supplying AI chips but also by investing in related companies. Observers note that prolonged uncertainties regarding Jensen Huang’s tenure could impact investor sentiment not just for Nvidia, but for related AI firms as well.
This controversy comes at a time when Nvidia stock has already been under pressure due to broader concerns over investment returns in the AI sector.
Nvidia stock plunged 9.26% on the 5th before rebounding 2.78% on the 6th to close at $186.64. However, it dropped sharply again as controversies surrounding Jensen Huang escalated.
Because Jensen Huang has previously advocated for easing U.S. export controls on semiconductors to China, attention is also focused on how this situation will impact Nvidia’s business in China.
