Nvidia board investigates CEO after intelligence reports

Jensen Huang faces a formal review by the Nvidia board of directors regarding his personal connections to a former Chinese business partner. The company announced the investigation on Sunday, stating that the inquiry will assess whether Huang was targeted by Chinese intelligence agencies. Nvidia shares dropped more than 4 percent in early trading on Monday. This decline occurred even as broader market indexes and major technology stocks posted gains.

The probe stems from reports that Huang formed a close relationship with an executive at a partner firm. That partner is identified as Megaspeed, which operates in the Asia-Pacific region. The executive, Alice Huang, is alleged to have transmitted information to Beijing. In a letter to staff, Jensen Huang confirmed he was not faithful to his wife. He declined to share specific details about the nature or duration of the relationship.

The board initiated an independent investigation to determine the full scope of the situation. Nvidia stated in a separate statement that it has no current evidence that company secrets or national security interests were compromised. The board emphasized that US national and economic security remain the top priorities for the firm. The company noted that these interests are paramount for both Nvidia and its shareholders.

The inquiry raises questions about leadership stability at a firm with a market capitalization of $4.5 trillion. According to LSEG data, Jensen Huang owns 3.6 percent of the company, making him the fifth-largest shareholder. He does not hold majority voting control, unlike leaders at Meta and SpaceX. This lack of absolute voting power may influence how the board proceeds with its review.

Market reaction on Monday was mixed, with the tech sector showing resilience. The Nasdaq index rose 2.7 percent in early trading, unaffected by Nvidia's drop. Microsoft shares increased by 2.2 percent, while Amazon climbed 3.8 percent. AMD stock jumped more than 10 percent, driven by a new deal with Google and a positive analyst upgrade. The Dow Jones Industrial Average gained 1.7 percent and the S&P 500 rose 2.1 percent.

Analysts suggest the CEO is likely to remain in his role despite the controversy. Michael Monaghan, portfolio manager of the Founders 100 ETF, told Al Jazeera that founder-led companies often outperform because a single individual drives the vision. Monaghan said it is highly improbable that Huang would be removed based on current information. He warned that Huang faces opposition from China hawks and those seeking to restrict data center construction.

This is not the first recent scrutiny of Huang's personal life. In October, The New York Times reported the relationship with Alice Huang. Megaspeed described itself as a core business partner for Nvidia's computing power cloud in the Asia-Pacific region. US authorities previously investigated Alice Huang and concluded she was a Chinese intelligence asset. China's Foreign Ministry rejected this view, calling it a groundless accusation during a briefing in Beijing.

The developments arrive during a volatile period for AI investors. Following US midterm elections, candidates running on anti-AI platforms won overwhelmingly. Democrats gained control of both the House and the Senate. Additionally, nearly all ballot measures restricting new data center construction passed. These outcomes caused shares of major AI firms to fall earlier in the week before recovering on Friday. Monaghan noted that the longer the investigation continues, the stronger the opposing groups become.