Nvidia shares fell about 4% on Monday, Nov. 9, after the chipmaker’s board opened an independent investigation into reports that CEO Jensen Huang was the target of a foreign intelligence effort, CNBC reported. Rival chip stocks moved the other way. Advanced Micro Devices gained 11% and Broadcom added 9%, according to CNBC.
Related: Nvidia Board Opens Independent Investigation After Reports CEO Jensen Huang Was a Spy Target.
What the market did
Nvidia dropped 5% in premarket trading and had reached an all-time high of $243.37 last month, WCVB reported. The stock had already fallen 12% in the two days after the midterm elections, as AI-related shares slid on fears of tighter oversight, CNBC reported.
Marvell, Arm, Intel and Qualcomm also rose on Monday, according to CNBC. Joachim Klement, an investment strategist at Panmure Liberum, told CNBC the impact was contained to Nvidia for now. He said it could spread to other chipmakers if Huang’s position came under threat and Nvidia cut back its support for other companies. The market figures come from CNBC’s report during Monday’s session and may differ at the close.
What the board is reviewing
Nvidia’s independent directors are running the review with outside legal counsel, TechCrunch reported. Huang told staff in an email that he had an affair and apologized. The New York Times and the Financial Times reported that U.S. intelligence agencies believe the woman involved, an executive linked to Nvidia customer Megaspeed, passed information to Beijing, according to CNBC.
The board said it had “no reason to believe” national security or company secrets were compromised, according to TechCrunch. China’s Foreign Ministry dismissed the spying allegations on Monday, calling them a smear campaign against Beijing, according to WCVB. An Nvidia spokesperson told CNBC that Huang intends to keep leading the company without interruption.
What analysts said
Dan Ives of Yorkville Ives & Co. told CNBC that talk of replacing Huang was “comedy.” In a note cited by WCVB, Ives wrote, “Jensen is not replaceable,” and said the chance of Huang leaving was small. He also said the board’s findings could still put Huang’s job at risk and would weigh on the stock in the near term.
One unnamed investor close to Huang told CNBC he could foresee a leave of absence, depending on what the board finds. That account rests on a single anonymous source and is unconfirmed. Huang is one of 11 Nvidia directors, and the board has no designated chair, CNBC reported.
Why China matters to investors
Nvidia recorded $7.9 billion in revenue from customers based in China in the three months ended July 26, about 8% of its total, TechCrunch reported. Huang has argued for continued chip sales to China and has called export controls a failure. TechCrunch reported that the allegations could complicate Nvidia’s assurances that it can keep sensitive technology from unauthorized customers.
What happens next
House committee chairmen have asked Huang for a closed-door briefing on Nov. 18, and it remains unclear whether he will attend, Tom’s Hardware reported. House Democratic leader Hakeem Jeffries told CBS News the matter was a significant concern, according to CNBC.
Nvidia reports third-quarter earnings on Nov. 17. CoreWeave and Nebius, two Nvidia-backed buyers of its chips, report this week, according to CNBC. More coverage is on our Markets and Artificial Intelligence pages.
Sources
- CNBC: Nvidia stock falls 4% as scrutiny turns to Jensen Huang’s affair with alleged Chinese spy
- CNBC: Nvidia’s CEO turmoil gives newly empowered Democrats fresh ammunition in pursuit of oversight
- WCVB: Nvidia shares drop after co. investigates whether CEO was “target of a foreign intelligence effort”
- TechCrunch: Nvidia will investigate CEO Jensen Huang’s relationship with possible Chinese spy
- TechCrunch: Jensen Huang’s affair with alleged Chinese spy puts Nvidia’s China ambitions under scrutiny
- Tom’s Hardware: Nvidia CEO Jensen Huang summoned to Congress over affair with alleged Chinese spy
Read next in Artificial Intelligence
Artificial IntelligenceHuang Affair Raises Nvidia’s Succession Question, With No Clear Successor to Its Co-Founder CEO
Artificial IntelligenceTrump Calls Jensen Huang an ‘Honorable Guy’ as Yale’s Sonnenfeld Puts the Nvidia CEO’s Survival at ‘About a 50-50’
Artificial IntelligenceOpenAI Reportedly Raises $11 Billion at $1.25 Trillion Valuation, Short of Its $30 Billion Target
Most read this week
- Abdul El-Sayed and the Muslim Brotherhood Claims: What’s Confirmed and What Isn’t
- Stock Futures Erase a 2.4% Overnight Drop as Markets Digest Democrats’ Sweep of Congress
- Spain Transport Minister Óscar Puente Quits 26 Days Before Election Over Crash That Killed 69
- Boston Plans to Close 3 Schools in 2028 as Enrollment Drops as Much as 58%
- GM Korea’s Sales Jump 26.6% on Chevrolet Exports as Hyundai Slips 6.3% and Korean Factory Growth Cools
Latest
- 5 GOP Senators Force Meeting Before Tuesday Leadership Vote After Midterm Losses
- Boeing to Cut About 5% of Commercial Airplane Workforce as 737 MAX Production Ramp Slows
- Amy Carnevale Won’t Seek New Term as MassGOP Chair After Party Loses Every Statewide Race
- Boston EMS Opens $16 Million Ambulance Station on South Boston Waterfront as Calls Grow
- College Football Playoff Doubles to 24 Teams in 2027, Ending Power Four Title Games