Nvidia shares tumble 8% after spy probe into CEO announced
Nvidia shares fell more than 8% on Monday after the board opened an investigation into CEO Jensen Huang over alleged Chinese espionage, wiping $335bn off its value.
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Nvidia's board launched an independent investigation into CEO Jensen Huang after reports he was targeted by Chinese intelligence, sending shares down more than 8%.
Nvidia shares fell more than 8% on Monday, the first trading session after the chip giant said it opened an investigation into CEO Jensen Huang over allegations of a Chinese intelligence-gathering effort targeting him. The stock dropped to $172.75, down from $186.64 on Friday, wiping $335bn off Nvidia's valuation and pushing shares to a seven-month low.
The board of the California-based firm initiated an "independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort," the company said in a statement Sunday. The investigation will be overseen by a "committee of independent directors, assisted by outside independent counsel," Nvidia added.
Investigation details
The probe follows a New York Times report late last month that Jensen Huang was targeted by a Chinese espionage plot centered around a woman identified as Alice Huang, a top executive at Singapore-based data company Megaspeed. U.S. intelligence officials determined she was funneling information to Beijing and had developed a "close relationship" with Jensen Huang.
Nvidia on Sunday shared an internal message Jensen Huang sent to employees, in which he said he was "unfaithful" to his wife. "My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry," the message said, in part. It did not name Alice Huang nor any other person.
Market reaction
The Chinese government denied the allegations, calling them "baseless and purely slanderous smears against China." Neither Alice Huang nor Megaspeed International responded to requests for comment after the report broke. A group of top congressional and intelligence leaders known as the Gang of Eight is expected to receive a general national security briefing from CIA Director John Ratcliffe and Director of National Intelligence Jay Clayton on Monday. Minority Leader Hakeem Jeffries said Monday morning that the alleged Chinese spy plot involving Huang will likely "come up" during the briefing.
Technology analyst Dan Ives at Yorkville Ives said the crisis would at the very least spark congressional inquiries and "create an overhang on the stock for a myriad of reasons." "This will add risk to the stock as he is so important to the Nvidia story and strategy globally," Ives said.
Briefing.com analyst Patrick O'Hare said Nvidia was being treated as a one-off story by investors for the moment. "In other words, the stock is being penalised for Jensen Huang's personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn't caught up in the notion that this situation is going to have a systemic domino effect," he said.
Frequently asked questions
Why did Nvidia shares fall on Monday?
Nvidia shares fell more than 8% after the board announced an investigation into CEO Jensen Huang over allegations he was targeted by a Chinese intelligence effort. The stock dropped to $172.75, wiping $335bn off the company's value.
What did Jensen Huang admit to?
In an internal message to employees, Huang said he was 'unfaithful' to his wife. He wrote, 'My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry.'
Who is Alice Huang?
Alice Huang is a top executive at Singapore-based data company Megaspeed International. Reports said U.S. intelligence officials determined she was funneling information to Beijing and had developed a 'close relationship' with Jensen Huang.
