Nvidia Falls 5.4% as Board Opens Probe Into Espionage Reports

The board said Sunday that it had no reason to believe Nvidia’s secrets or national security had been compromised and expressed confidence in Huang’s leadership. A committee of independent directors, assisted by outside counsel, will oversee the inquiry, which the board said would examine “all available information.”

The Wall Street Journal previously reported that U.S. officials concluded last year that Alice Huang, then a senior executive at Megaspeed International, shared information with the Chinese government while working with Nvidia on data centers in Asia. She is also known as Huang Le and is not related to Jensen Huang. China’s Foreign Ministry rejected the spying allegations on Monday, calling claims that the woman had ties to Chinese intelligence “unfounded.” Jensen Huang apologized to staff on Sunday for being unfaithful to his wife.

Analysts said the investigation could prompt congressional inquiries and weigh on Nvidia shares. Dan Ives and other analysts at Yorkville Ives said Huang was likely to remain CEO in the near term, though his position could depend on the board’s findings. “This will add risk to the stock, as he is so important to the Nvidia story and strategy globally,” they wrote. They also said the case could intensify U.S. scrutiny of chip sales to China.

Jukan Choe of Citrini Research pointed to Huang’s influence over Nvidia and the lack of an obvious successor, saying concerns could arise that innovation would slow if his leadership weakened. Nvidia shares are roughly flat so far this year and about 22% below their October peak. Semiconductor stocks sold off last week amid mounting concerns about the artificial-intelligence trade, amplified by the Democrats’ midterm election victory.