Nvidia falls 4.27% as its board investigates Jensen Huang's relationship with an alleged Chinese spy

Editor's note: the original link pointed to a piece titled «The climate case for AI has not been made», but the content retrieved is a different one, a CNBC article about Nvidia. This summary is based solely on that article. The article reports that the stock closed Monday down 4.27%.

According to the article, Nvidia's board of directors has opened an independent investigation following reports by The New York Times and the Financial Times. Those outlets say CEO and co-founder Jensen Huang was the target of a «foreign intelligence effort». US intelligence agencies say Alice Huang, an executive at cloud company Megaspeed, has been passing information to Beijing. The article describes her as a businesswoman with whom Huang had a relationship.

Nvidia said on Sunday that Huang fully supports the review and has pledged to cooperate. In an email to staff, Huang admitted he had «failed» in his responsibility to his colleagues, the board, partners and shareholders. He also 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».

For his part, Chinese Foreign Ministry spokesperson Guo Jiakun said, according to Reuters, that the so-called «Chinese spy narrative» lacks evidence.

The article gathers several market reactions. Dan Ives of Yorkville Ives & Co. called the episode a «black eye moment» and a «game changer» for the CEO and the company. Even so, he believes talk of replacing Huang is «comedy» and that Nvidia remains two to three years ahead of China in AI chips. He acknowledged that investors' concern is whether Huang will stay in the role. In his view, the market considers it likely, but the board's investigation creates major uncertainty.

Joachim Klement of Panmure Liberum said the impact is for now contained to Nvidia. He warned that if Huang's position were at risk, Nvidia could scale back its support for other companies in Asia or the US, and the effect could spread to other semiconductor stocks.

There were also public shows of support. Donald Trump said on Sunday that Huang is «an honorable guy», that he probably has an explanation and that he has done «an incredible job for our country». He added that he had not spoken with him about the investigation. Shaun Maguire, a partner at Sequoia, called him on X one of the greatest entrepreneurs of his generation, and Elon Musk shared the post, saying he agreed.

The article adds that Nvidia's drop contrasted with the performance of other stocks in the sector that same Monday. Marvell rose 9.49%, Arm Holdings 6.69%, Intel 5.49%, Qualcomm 3.66%, Broadcom 8.78% and AMD 13.26%. Asian tech stocks also rebounded after Friday's losses. The previous week, according to the text, tech stocks fell sharply as investors reassessed the data center build-out after Democrats won control of Congress.

Nvidia is scheduled to report third-quarter results on November 17 and to hold a major conference in Washington D.C. later this month. Both events will be the next opportunity to gauge the investigation's effect on the company and its leadership.