- The selling did not stop at one day. Nvidia shares sank a further 4% on Tuesday after closing more than 4% lower on Monday, a roughly 8% two-day slide by our calculation, as investors weighed the fallout from CEO Jensen Huang’s affair with an alleged Chinese spy, CNBC reported.
- Congress is now pressing three specific questions. Rep. John Moolenaar, R-Mich., who chairs the House Select Committee on China, told CNBC’s “Squawk Box” he wants to know whether Huang shared privileged information with a Chinese spy, whether he was influenced to lobby against curbs on chip sales to China, and whether China got preference for Nvidia’s limited supply of advanced chips.
- Moolenaar warned against a whitewash. “If it becomes less of an investigation, more of damage control, that’s not going to work because people have to have confidence,” he said, calling the U.S.-China contest “basically a Cold War race with technology.”
- Rivals are picking up the slack. AMD climbed 5% Tuesday for a third straight gain, after rising 11% Friday and 13% Monday, while Broadcom rose 4%, and Yorkville Ives & Co.’s Dan Ives said Street and investor chatter assigns roughly a 15% chance Huang is removed as CEO.
What Happened?
Nvidia’s two-day decline follows Huang’s email to staff saying he had been “unfaithful” to his wife and had “fallen short” of his responsibilities as CEO. He reportedly had an affair with Alice Huang, an executive at Nvidia customer Megaspeed, whom The New York Times reported U.S. officials had concluded was “a Chinese intelligence asset.” The two Huangs are not related. Moolenaar co-authored a Nov. 5 letter with Rep. Brian Mast, who chairs the House Foreign Affairs Committee, and Rep. Rick Crawford, who chairs the House intelligence panel, asking Huang to appear before their committees, writing that the reports “raise significant national security concerns regarding the PRC’s access to sensitive U.S. technology and information.”
Why It Matters?
The scrutiny is widening beyond Nvidia’s boardroom. Congressional pressure has intensified since lawmakers returned to Washington on Monday, and House Minority Leader Hakeem Jeffries said “we’re going to need a full briefing” on the national security implications. Moolenaar’s questions go to the heart of Nvidia’s China business and its Washington lobbying, which could expose the company to political risk that lasts longer than the internal probe. Ives said a board investigation could take four to six weeks and would weigh on the stock until more news emerges from Nvidia, which helps explain why money is rotating to AMD and Broadcom.
What’s Next?
Investors will watch whether Huang agrees to testify before the three House committees and whether Democrats launch their own oversight push. The outcome of Nvidia’s board investigation, which Ives expects to take four to six weeks, is the key catalyst for the stock. A class-action shareholder suit filed in federal court in San Jose adds a legal track to follow.
