Nvidia announced on Sunday that it is investigating whether CEO Jensen Huang has been the focus of a “foreign intelligence effort,” following a report suggesting he had a close association with a Chinese businesswoman who allegedly relayed information to Beijing.
In a communication to employees, Huang acknowledged infidelity towards his spouse and accepted “full responsibility” for his actions. Meanwhile, Nvidia confirmed that the CEO intends to continue leading the company without any disruptions.
These recent events could exert pressure on the chipmaker’s stock, which has already faced significant declines amid concerns regarding the sustainability of the AI sector, potentially raising doubts about Huang’s future leadership of the company he co-founded.
According to a report from The New York Times last month, Huang was involved with a former executive of a Singapore-based firm that U.S. authorities investigated and identified as a potential Chinese intelligence asset.
“The Nvidia board is launching an independent inquiry following recent reports that founder and CEO Jensen Huang may have been targeted by a foreign intelligence effort. A committee of independent directors, supported by external independent counsel, will manage this investigation,” the company stated.
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The global tech firm mentioned on Sunday that while its board sees no evidence suggesting that U.S. national security or Nvidia’s proprietary information was compromised, the inquiry will review all pertinent information.
Nvidia expressed confidence in its CEO and his leadership team, stating that Huang fully endorses the review and has pledged to cooperate with it.
‘He’s an honourable guy,’ Trump says
U.S. President Donald Trump remarked on Sunday that he had not discussed the allegations with Huang but referred to him as a good individual.
“I hope everything’s alright. He’s accomplished such an incredible job,” Trump commented.
When asked if he felt he should have acted upon the intelligence when briefed, Trump replied: “No, I don’t believe so. I think he’s an honourable guy. He probably has a reason for it. You need to hear him out.”
Huang and U.S. President Donald Trump are shown in Washington on Oct. 8. (Julia Demaree Nikhinson/The Associated Press)
The New York Times previously reported that Trump had been briefed on the intelligence findings around a year ago but opted not to take action with the information.
U.S. Secretary of State Marco Rubio refrained from commenting on Huang when approached by reporters on Sunday evening.
China’s Ministry of Foreign Affairs did not respond promptly to a Reuters request for a statement.
Huang, who established the company in 1993, expressed his commitment to safeguarding Nvidia and supporting national security in the United States.
‘Black eye moment for Jensen’
This investigation adds further strain on Nvidia at a time when investors are already hesitant due to uncertainties surrounding the viability of the artificial intelligence market, where the company is a key player.
The shares of the $4.5-trillion U.S. chipmaker have relinquished all their gains for the year amid a broader downturn in the tech market fueled by concerns over AI sustainability.
“There is a clear risk that Jensen could be removed as CEO depending on the outcome of the board’s investigation, which will create additional risks for the stock as he is integral to Nvidia’s narrative and strategy worldwide,” remarked Dan Ives, partner and senior managing director at Yorkville Ives & Co.
The artificial intelligence boom is driving a worldwide shortage in memory chips that could soon drive up prices in everything from smartphones to laptops to video game consoles.
“This is a difficult moment for Jensen and will likely lead to multiple congressional inquiries at minimum, creating additional challenges for the stock,” Ives noted, emphasizing that this news would also heighten scrutiny regarding chip sales to China.
Huang acknowledged having been unfaithful to his wife, stating, “My actions have harmed her and our children. There is no justification for what I did. I am deeply remorseful.”
Speaking to his colleagues, board, partners, and shareholders, Huang mentioned: “It is my duty to serve you and to be deserving of your trust. I have fallen short of that obligation. I am fully dedicated to Nvidia and will strive to regain your confidence.”
Huang delivers a speech at a company event in Berlin on Oct. 21. (Markus Schreiber/The Associated Press)
In late October, he informed Bloomberg News that his interactions with the Chinese businesswoman were “completely normal and not unusual.”
Josh Gilbert, lead analyst at trading platform eToro, remarked that Huang’s influence is evident in every aspect of the company’s growth, so any uncertainty regarding his role would be significant for shareholders.
“While the investigation may negatively impact sentiment, it won’t have any long-term effects unless it results in a leadership change, at which point the situation becomes entirely different,” Gilbert stated.
Lawmakers express security concerns
Prominent Republican lawmakers in the U.S. House of Representatives have already requested Huang to provide a briefing to Congress this month regarding the New York Times report.
The article raises “substantial national security concerns regarding [China’s] access to sensitive U.S. technology and information,” the Republican lawmakers wrote in a letter dated Nov. 4. “It is essential for Congress to ascertain the extent to which U.S. national security has been jeopardized.”
Since 2022, U.S. export controls have aimed to limit China’s access to advanced Nvidia chips and the necessary manufacturing equipment.