Nvidia shares fell about 5% in premarket trading Monday after the company’s board said it is opening an independent investigation into reports that founder and chief executive Jensen Huang was the target of a foreign intelligence effort.
The stock traded near $176.50 less than an hour before the U.S. open, compared with Friday’s close of $186.64. The shares had already fallen 22% from their Oct. 6 close of $239.24 by Friday, including a 9.3% drop on Nov. 5 in what CNBC called an AI-driven sell-off.
In a statement released Sunday, Nvidia’s board said independent directors will run the investigation with help from outside counsel. The board said it has “no reason to believe” that national security or company secrets were compromised, and that it has confidence in Huang and his leadership team.
In a message to employees published by Nvidia, Huang said he had been unfaithful to his wife, took full responsibility and would cooperate with the investigation. CNBC reported that the relationship was with a businesswoman who U.S. intelligence agencies allege is a Chinese spy. Neither Huang’s message nor the board’s statement names her. The New York Times reported the intelligence allegations on Oct. 29. An Nvidia spokesperson told ABC News last month, before Sunday’s statements, that Huang’s interactions with the woman were “not unusual or unexpected.” Yahoo Finance UK said the intelligence-related allegations have not been independently verified.
Nvidia told CNBC that Huang is committed to continuing as chief executive without interruption. Dan Ives, an analyst at Yorkville Ives & Co., called the episode a “black eye moment” and predicted congressional inquiries, while saying he expects Huang to remain in the role in the near term.
Broader stock futures rose despite Nvidia’s decline, with S&P 500 futures up 0.9%, CNBC reported. Investors will watch the investigation’s findings, any response from Congress and Nvidia’s quarterly results later this month.
