Key Points
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Multiple media outlets have reported that a woman previously associated with Nvidia’s CEO, Jensen Huang, may have been passing intelligence to China.
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In an email to employees, Huang acknowledged that he was “unfaithful” to his wife.
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Depending on what Nvidia’s board investigation finds, there could be several ramifications for the stock.
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In a startling revelation for Nvidia (NASDAQ:NVDA) and possibly the entire artificial intelligence trade, U.S. intelligence agencies are probing Nvidia’s CEO, Jensen Huang, over past dealings with a woman who may have been a Chinese spy.
Reports from The New York Times and The Financial Times suggest that the woman of interest, Alice Huang, an executive at the cloud company MegaSpeed, may have passed information to Chinese intelligence agencies. Alice Huang shares no relation to Jensen.
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After the story built steam, Jensen eventually sent an email to employees on the matter, and Nvidia announced it was launching its own investigation. Nvidia shares traded nearly 4.7% lower, as of 12:47 p.m. ET.
Jensen Huang just delivered shocking news that could become an overhang on the stock.
Jensen Huang. Image source: Nvidia.
Assessing whether the relationship helped China circumvent export restrictions
In an email reportedly sent to employees, Jensen acknowledged that “I was unfaithful to my wife.”
In recent weeks, The New York Times and Financial Times have reported on a Singaporean data center company called MegaSpeed, where Alice Huang was a top executive. A MegaSpeed affiliate reportedly purchased nearly $5 billion of Nvidia chips. The reporting suggests that Alice may have helped China circumvent U.S. export restrictions.
Previously, Chinese companies like DeepSeek released large language models (LLMs) that showed surprisingly strong performance and claimed they were built using outdated Nvidia chips. Critics have argued that these companies actually found ways to obtain advanced Nvidia chips illegally.
In his email to employees, Jensen stated that the company’s board of directors has launched an investigation into the matter. “I support the investigation and will cooperate fully,” he stated.
Nvidia issued a press release regarding the investigation, stating it had no reason to believe that national security interests or any Nvidia secrets had been compromised.
A spokesperson for China’s Ministry of Foreign Affairs called the allegations “unsubstantiated” and “… smears against China.”
Why this could be an overhang on the stock
The allegations raise several concerns for shareholders.
For one, Nvidia hasn’t sold many chips to Chinese companies since early 2025, when the U.S. government told Nvidia it would need an export license to continue doing business with them.
Officials from both former President Joe Biden’s administration and the Trump administration have shared national security concerns about what China could do with its AI capabilities.
Since then, Huang has lobbied the Trump administration to remove restrictions on sales to China and has said that export restrictions will not slow China’s progress in AI. Recent reports suggested Nvidia had received $35 billion in orders from Chinese companies.
If the U.S. intelligence agencies suggest foul play, that could lead to new export restrictions or delay the recently reported Chinese chip orders for Nvidia. Jensen also had to curry favor with Trump to restart sales to China, so it would be interesting what might happen if his relationship with Trump sours, although Trump has reportedly come out in support of Huang.
“This is a black eye moment for Jensen and will spark multiple congressional inquiries at a minimum and will create an overhang on the stock,” Dan Ives, a partner and senior managing director at the newly-created Yorkville Ives & Co. investment bank, said in a research note, according to Reuters. “There is clearly risk that Jensen could be removed as CEO depending on the Board investigation and this will add risk to the stock as he is so important to the Nvidia story and strategy globally.”
A Nvidia spokesperson told CNN that “Jensen is committed to continuing to lead NVIDIA as CEO without interruption.”
I think most would agree that shareholders and Nvidia’s board would like Jensen to continue to lead the company. After all, there is really no greater spokesperson or advocate for the AI trade than Huang.
The risk is that Nvidia’s board or intelligence agencies uncover new information that leads to Huang’s ouster or further security restrictions on chip sales to China. Both of those could materially impact the stock.
Until it’s clear that these concerns won’t come to fruition, I would agree that this investigation will continue to serve as an overhang on Nvidia’s stock
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
