🤖 Nvidia board opens Jensen Huang probe; shares seen 4% lower

Nvidia's board of directors said on Sunday, Nov 8, that it had opened an independent investigation "in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort," according to the board statement as reported by the FT and AP. A committee of independent directors, assisted by outside independent counsel, will oversee it, ABC News reports. The reports read give the day but no time of day for the announcement.

What the company confirmed

The board says it has "no reason to believe that either national security or NVIDIA secrets were compromised," but that its inquiry "will examine all available information," per AP. Huang, 63, stays CEO throughout. Spokesperson John Rizzo said in a statement: "Today's news will not slow Nvidia." The same AP report says Huang "fully supports the review and has committed to cooperating with it."

"I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry."

Jensen Huang, memo to Nvidia staff, as published by Business Insider

AP reports the memo did not name Alice Huang or address her reported ties to Beijing. It referred only to "the national security concerns raised in news reports." The admission is his own words. The spy claim is not.

The market-value hit

The BBC puts Nvidia's market value at around $4.5tn and reports that overnight trading indicated the stock would open about 4% lower in New York. That is an indication, not a close. The sources read contain no closing price. The FT notes Nvidia's valuation has grown from roughly $1tn in 2023 to $4.5tn.

Opinions differ. Bloomberg's Minmin Low told ABC that markets looked "quite resilient" and that investors were "not seeing this as a change to the fundamentals of the AI trade," though "a lot really rests on the ongoing investigation." CNBC's Jim Cramer, whose charitable trust is long Nvidia, wrote that he would not buy it on Monday, that the stock "will probably go lower from wherever it opens," and that long investigations "spell dead money for shareholders." The company said today's news would not slow it. The overnight screen was asked for a view and gave one.

Who says what about Alice Huang

The New York Times reported last month that US intelligence agencies concluded Alice Huang, a Chinese citizen and executive at Singapore-based data centre firm Megaspeed, was passing information to Beijing, and that Jensen Huang had a close relationship with her, per AP. The BBC notes the Times cited unnamed sources. The two Huangs are not related. Megaspeed bought more than $4.8 billion in Nvidia chips over two years, according to the Times as relayed by AP.

China's foreign ministry denies it. Spokesperson Guo Jiakun said the allegations are "pure groundless speculation and slander," per ABC News. ABC reports Alice Huang could not be reached by the NYT or the FT, and the White House and CIA declined to comment to both. Megaspeed told the NYT its current leadership takes the matter "extremely seriously" and has commissioned an internal investigation by outside counsel, per the BBC. The BBC says it has contacted Megaspeed for comment. No public response from Alice Huang was found in the reports read.

What happens next

The House letter asked Huang to accept the Nov 18 closed-door briefing or propose another date by Nov 11, per the BBC. Nvidia reports earnings on Nov 17, according to Mashable. ABC reports Sen. Chris Coons, who will chair the Senate foreign relations committee from January, pledged an investigation of his own. No source states a timeline or a reporting date for the board's inquiry.

Backstory

Our earlier story, "🤖 Congress presses Nvidia's Jensen Huang over Megaspeed claims," covered the House request. Per the BBC, the three committee leaders (Brian Mast, John Moolenaar and Rick Crawford) asked him to discuss Nvidia's "security protocols against foreign adversary espionage." They wrote that "the issue of PRC infiltration and access to cutting-edge US technology is core to the investigative work of our three committees."

Megaspeed was already on the record. US authorities investigated it last year over allegations it helped divert Nvidia chips to China, and Singapore opened its own probe, per Mashable and the BBC. Megaspeed denied wrongdoing, saying it had been investigated and cleared. Huang told Bloomberg late last month that his interactions with her were "completely normal and not unusual," per Mashable. The memo says otherwise about the affair. It is silent on the rest.

As of Nov 9, 3:23 AM ET, confirmed on the record: Nvidia's board has opened an independent investigation, Huang has admitted in a staff memo that he was unfaithful to his wife, and he remains CEO. Pending: the investigation's scope and timeline, Huang's answer to the House by Nov 11, the Nov 17 earnings report, and whether the overnight indication of a 4% lower open holds in trading. The claim that Alice Huang worked for Chinese intelligence rests on the NYT and FT reporting. China rejects it.