Nvidia Shares Drop as CEO Jensen Huang Faces Scrutiny Over Internal Probe
Overview of Nvidia's Leadership Crisis and Market Impact
By Heekyong Yang, Kyu-seok Shim and Tom Westbrook
Internal Investigation and Allegations
SEOUL/SYDNEY, Nov 9 (Reuters) - Nvidia shares fell in out-of-hours trading on Monday after an internal investigation into whether CEO Jensen Huang had been targeted by a foreign intelligence effort put his future at the AI chipmaker under scrutiny.
The internal probe followed a media report that Huang had a close relationship with a Chinese businesswoman who allegedly passed information to Beijing. Huang told Nvidia's employees that he had been unfaithful to his wife, without disclosing details of the relationship.
The investigation, announced on Sunday, has put a spotlight on Huang's future given Nvidia's status as the world's most valuable chipmaker and the CEO's role as the most prolific salesman of the AI boom.
Family Impact and Conference Changes
The fallout extended to South Korea, where Madison Huang, Huang's daughter and an Nvidia executive, cancelled a planned visit to Seoul for an Nvidia conference that was set to begin on Monday, according to companies she had been scheduled to meet.
Market Reaction to the Probe
Perpetual futures trading on the Hyperliquid exchange and after-hours shares trading on the Blue Ocean system showed Nvidia prices around $180.30 a share, down about 3.4% from Friday's Nasdaq closing price of $186.64.
Expert Opinions on CEO Jensen Huang's Role
"The market's probably telling you now this does no favours to the stock whatsoever in a time when there's a lot of conjecture as to the build out of data centres," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.
But Weston said he did not think Huang, whom he described as the "godfather of AI", would be replaced.
"If we genuinely thought he was going to step down ... the stock would be down — it would be an absolute bloodbath, to be honest,” he said.
Background on the Allegations
The New York Times reported last month that Huang had a relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed, who US authorities investigated and concluded was a Chinese intelligence asset.
Megaspeed did not respond immediately to a request for comment on Monday, a public holiday in Singapore.
Alice Huang did not respond to the New York Times last month when it first reported her relationship with Huang, and Reuters could not determine her location to seek comment on Monday.
Asian Partners and Global Reactions
Stock Performance of Asian Suppliers
ASIA PARTNERS UNAFFECTED
Shares in Nvidia's key Asian chip suppliers TSMC, Samsung Electronics and SK Hynix rebounded on Monday after last week's selloff of AI-related stocks. TSMC shares jumped 6.5%, while those in Samsung and SK Hynix climbed 2.9% and 4.7%, respectively.
Comments from Industry Leaders
Some prominent figures weighed in on Huang's admission. Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, said on X that the Nvidia CEO was an "incredible human," but if "indeed this is more than an affair, then it is obviously a real problem."
"I am hoping for a simple affair, not a risk to our national security," he added.
Tesla CEO Elon Musk commented "I agree" on a post by Sequoia partner Shaun Maguire that said Huang "did something incredibly dumb" that was "bad for America" but that "Jensen is irreplaceable for America's AI leadership".
US President Donald Trump said on Sunday he had not spoken to Huang about the allegations, but called him a fine person. "I hope everything's fine. He's done such an incredible job," he added.
When asked if he believed he should have acted on intelligence when he was briefed about it, Trump said: "No, I don't think so. I think he's an honorable guy. I think he probably has an excuse for it. You have to hear it."
The New York Times reported that Trump was briefed about the intelligence findings roughly a year ago and chose not to do anything with the information.
Cancelled Visit and Event Implications
Details of Cancelled Events
CANCELLED VISIT
Madison Huang had initially planned to visit South Korean AI startup Rebellions and hold a question-and-answer session with Kakao Mobility. Rebellions said the events were cancelled due to "unavoidable internal circumstances at Nvidia."
Proceeding with Nvidia AI Day Seoul
Nvidia AI Day Seoul, a two-day event expected to draw about 2,000 participants to discuss physical AI, agentic AI and infrastructure, will proceed as planned, according to South Korean media. Nvidia did not respond immediately to a request for comment.
Potential Industry Impact
Analyst Perspectives on Nvidia's Future
Analysts said a prolonged investigation or internal review could potentially delay Nvidia's investment decisions or product launches, with broader implications for the semiconductor industry.
Ryu Young-ho, a senior analyst at NH Investment & Securities, said Nvidia's rivals, including Advanced Micro Devices, could attract greater attention in the short term, potentially putting Samsung, which has close business ties with AMD, in the spotlight.
Challenges in Replacing Nvidia's Products
Still, he said Nvidia's products would be difficult to replace, limiting the potential impact, although shipments to China could face further delays depending on how the situation developed.
Government Response
South Korea's deputy science minister said on Monday the government expected no disruptions to contracted deliveries of Nvidia graphics processing units despite issues currently facing the company.
(Reporting by Kyu-seok Shim and Heekyong Yang in Seoul, Tom Westbrook in Sydney and Roger Tung in Taipei; Writing by Brenda Goh; Editing by Ed Davies and Jamie Freed)