Nvidia shares dropped sharply on Monday morning as the company began investigating CEO Jensen Huang’s extramarital relationship with a suspected Chinese spy.
As of 6:30 a.m. ET, the stock was 4.8% lower in premarket trading, set to open at roughly $178, which would wipe out close to $200 billion from Friday’s closing valuation.
The stock has already fallen 20% over the past month.
Tech shares have faced a broader sell-off amid investor concerns that AI infrastructure won’t be built as quickly as hoped, sparked by neocloud firms’ high debt levels and the Democrats’ big gains in the midterm elections, which could slow data center construction.
Huang cofounded Nvidia in 1993 and has overseen a meteoric rise, with the company worth trillions since the AI boom supercharged demand for its chips.
As its founder and longtime CEO, Huang is pivotal to Nvidia’s ongoing success, and Monday’s share price decline likely reflects concerns about his potential departure due to the scandal.
“The so-called ‘key-man risk’ looms large here, and it’s doubtful markets have adequately priced it in,” Mohamed El-Erian, the legendary bond investor, wrote in an X post.
“This will not be easy for the board to navigate.”
Revelations about Huang’s personal life
In late October, The New York Times reported that American intelligence agencies discovered that Huang had a close relationship with Alice Huang, a Chinese citizen and former executive at Megaspeed, a Singapore-based data center company.
US officials suspected her company was steering Nvidia’s advanced AI chips to China, and concluded that she was a Chinese intelligence asset, the report said.
At the time, an Nvidia spokesperson told the Times, “Jensen’s interactions with Ms. Huang are not unusual or unexpected.”
On Sunday, Jensen Huang sent a note to staff acknowledging he had been “unfaithful” to his wife, Lori Huang, to whom he’s been married for over 40 years.
Nvidia’s board of directors opened an investigation into whether its CEO was the target of a “foreign intelligence effort.”
“My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,” he wrote. “I support the investigation and will cooperate fully.”
