Nvidias value tumbles by $330bn after honeytrap investigation launched, as China denies spying claims – business live

As we've been reporting, shares of Nvidia tumbled more than 5% on Monday after the computer chip maker, central to the artificial intelligence race, opened an investigation into reports that its CEO, Jensen Huang, was the “target of a foreign intelligence effort.â€

Further to my last post regarding succession at Nvidia, there's a small chance Huang is removed or steps down from the CEO post, Dan Ives, partner and senior managing director at Yorkville Ives + Co., told the Associated Press that Huang is “not replaceableâ€.

“On the heels of last week's Blue Tidal Wave [in the US midterm elections] this will also increase momentum for more regulatory scrutiny in the Beltway especially around China and chip restrictions at a time the AI Arms Race is heating up into its next gear between the US and China,†Ives said.

Still, Ives said there is a risk, as Huang could be removed as CEO depending on the board's investigation and that it will remain an overhang on shares near term.

Too big – and too well-connected – to sack? One doesn't have to be overly cynical to think Jensen Huang, the Nvidia boss, starts with one huge advantage as the chipmaker's board starts its independent investigation into the alleged honeytrap spy scandal. The world of US big tech is not, to put it mildly, strong on checks and balances on a founder's power.

Huang does not enjoy the supercharged voting rights that are par for the course elsewhere – his shareholding is a plain vanilla 3.6%. On the other hand, Nvidia's board does not appear to have spent much time worrying about succession planning and “key person risk†or other standard concerns of corporate governance wonks outside the US.

There isn't even a Nvidia board member with the title of chair. Instead, a “lead director†is “designated annually by a majority of the independent directorsâ€, which sounds like a formula for ensuring the attention remains wholly focused on Huang, the sole executive member.

It's the American way, of course: the cult of the superstar founder or chief executive runs deep and there is a fair argument that such set-ups encourage adventurous risk-taking in pursuit of grand corporate visions. But such governance arrangements look unsuited to situations where the behaviour of the boss is under scrutiny and the role of the board itself is being examined.

The investigation will examine whether Huang “has been the target of a foreign intelligence effort†but the independent directors stressed there is now “no reason to believe that either national security or Nvidia secrets were compromised.â€

But legitimate questions don't end there. Did Huang break Nvidia's internal code of conduct? Did he mislead the board about his relationship with Alice Huang (no relation), the alleged Chinese spy? Was the board aware of US intelligence reports that Ms Huang had been hired by China's ministry of state security to spy on the Nvidia boss, as reported by the New York Times? What security precautions were in place? Other boards in other countries might have insisted on suspending the boss until all the facts are in.

In the meantime, the defence of Huang from elsewhere has begun. “An honourable guy. I think he probably has an excuse for it,†said Donald Trump. “Jensen is irreplaceable for America's AI leadership,†opined Shaun Maguire, a partner at Sequoia Capital, the powerful Silicon Valley investor. Yes, there is little doubt the US tech and political establishment would like this saga to end up in a series of bland conclusions about an everyday infidelity.

Nvidia's board, however, would be wise not to rely on the “irreplaceable†consensus holding, or the political heat going away. This affair will be trawled over by newly empowered Democrats in Congress because it touches on how forcefully – or not – the administration has been enforcing its own national security restrictions on chip sales to China. This process will go on for months. Huang's personal relationship with Trump will come under the spotlight like never before.

Will the Nvidia boss, even if he is cleared by the board's investigation, still look so all-conquering by the end? His lobbying clout in Washington will be diminished. And Nvidia's shareholders, if they're doing the job properly, will surely insist on far greater visibility on where the company's chips end up.

There may come a point where it is in Nvidia's own interests to move on from the Jensen Huang era. The 63-year-old deserves all his accolades for spotting the enormous AI opportunity for the GPU chips that originated in the world of video games. The rise of Nvidia has been extraordinary. But over-reliance on one individual is also a business risk. Time for some overdue succession planning – it may be needed.

Nvidia's embattled CEO Jensen Huang has disappeared from the line-up of two tech events he was due to speak at this week, according to Business Insider (paywall).

Insider reports: “Ahead of its expected IPO next week, Anthropic is hosting a private CEO forum this week in Montecito. Huang was set to be interviewed by an Anthropic executive on Monday evening, a person familiar with the event told Business Insider. He is no longer expected to attend, according to a second person familiar with the matter.â€

There is little public information available about Alice Huang, the woman reportedly at the centre of the Jensen Huang honeypot allegations, a fact that has only added fuel to claims she is a Chinese intelligence asset.

She was the chief executive of a Singapore-based datacentre company reportedly suspected of evading US export controls and routing Nvidia chips to China.

US officials then came to believe she was also a spy for Beijing who was having an affair with Jensen Huang, the chief executive of Nvidia, the chip company critical to US ambitions to stay ahead of China in the AI race.

People briefed on the US intelligence told the New York Times they believed Alice Huang was recruited as part of efforts to learn more about American AI chips, and to try to persuade Nvidia to push for its advanced chips to be made available to China.

China has denied the allegations, calling them “nothing but smearsâ€.

It is unclear exactly when the two Huangs, who are not related, first met.

Alice Huang speaks good English and is well connected within the upper echelons of the global AI chip industry, the New York Times wrote, citing people who had met her.

Megaspeed, the datacentre company for which she was previously listed as chief executive, still describes itself as “a premier business partner of Nvidia†on LinkedIn.

It was in this capacity that the businesswoman was pictured in Jensen Huang's company several times in 2024 and 2025.

One photo from an industry party in 2024, posted by another attending company on LinkedIn, shows the two sitting next to each other on a couch in Taipei.

The year after, they were filmed together again in Taipei at a dinner hosted by Jensen Huang during Computex, the island's top tech expo.

Press outside livestreamed footage of the two, seemingly comfortable in each other's company, with Jensen Huang at one point putting his arm around Alice Huang as she kissed him on the cheek.

The two later left the restaurant in the same car, the footage showed.

A New York-based short-selling firm first raised concerns publicly about their “uncomfortably close relationship†six months ago.

Earlier this year, US officials wrote a memo saying the two Huangs had been romantically involved, the Financial Times reported on Saturday, citing sources who had seen it.

On Sunday the Nvidia chief executive sent a company-wide email apologising for an affair.

He did not name Alice Huang but said he would cooperate with an investigation “regarding the national security concerns raised in news reportsâ€.

Alice Huang's current whereabouts are unknown, and she has not given a public statement about the allegations.

It is unclear what her current relationship is with Megaspeed, though Culper Research, the short-selling firm, quoted an employee in May as saying that contrary to public reporting, Alice Huang was “actually still our bossâ€.

The details of her career before that are difficult to ascertain.

Several media outlets have cited a profile matching her name and picture on a Chinese fund database, which listed previous jobs at banks including HSBC and CITIC, as well as roles at Chinese media outlets CCTV and Hunan TV.

However, reporters have been unable to confirm any of the details listed.

Megaspeed is among a number of south-east Asian firms that buy chips to build facilities and then rent their computing power to companies in China.

According to Singapore's the Straits Times, it was previously known as 7Road International – a Chinese gaming company with ties to state-backed investors.

At the time of the rebrand, it was owned by Huang Le Limited and led by Alice Huang, the newspaper said, before the ownership was transferred to another company in 2023.

Since late 2024, the US government has reportedly been investigating Megaspeed for helping companies in China sidestep American export restrictions.

The New York Times said Singapore questioned Alice Huang during its own investigation into the company, but released her.

Nvidia has previously said it has looked into Megaspeed but found no cause for concern.

The Guardian has contacted Megaspeed for comment.

Donald Trump, Elon Musk and prominent finance moguls have expressed their support for embattled Nvidia CEO Jensen Huang, as the head of the world's most valuable chip company faces an internal investigation over a romantic relationship with an alleged Chinese spy.

“I have not ​spoken to him about it,†the US president told reporters on Sunday.

I just know he's a fine person, but you never know what is going on. I'm sure, I hope everything's fine. He's done such an incredible job.

“I think he's an honorable guy. I think he probably has an excuse for it,†Trump later added, saying he believed that Huang would and should stay on as CEO.

Huang's defenders framed his affair as a personal lapse in judgment rather than evidence of treachery against the United States, which has imposed strict limits on what chips Nvidia can sell to China.

As news of the scandal broke over the weekend, Musk and prominent investors shared their support of Huang. Musk posted “I agree†in response to prominent venture capitalist Shaun Maguire's defense of Huang.

“Two mistakes don't make a right, and I believe Jensen is irreplaceable for America's AI leadership,†Maguire posted. He stated the Nvidia CEO “did something incredibly dumb†but that he is “one of the greatest entrepreneurs of this generationâ€.

“Let's also not nuke our AI industry because China ran a successful intel op,†Maguire added in a separate post.

Bill Ackman, the US hedge fund manager and pro-Trump billionaire, meanwhile, suggested that Huang is “human†and deserves public support over the affair.

“He is an incredible human. Even incredible humans make mistakes,†Ackman posted. “He takes full responsibility as he should. We should all support him and his family. Onward.â€

Ackman followed up with another post later clarifying that he wasn't suggesting Huang “gets a free pass†but that he was “hoping for a simple affair, not a risk to our national securityâ€.

Investigators at the US commerce department had been looking into a Singaporean company suspected of smuggling Nvidia's AI chips into China last year, the New York Times reports.

The probe came to an abrupt end when it was transferred instead to the justice department, following an email from Nvidia's general counsel seeking information.

The investigation was centred on data centre company Megaspeed, led by an executive now believed to be a Chinese spy who had a relationship with Nvidia's CEO Jensen Huang.

The NYT reports:

It is not necessarily unusual for Commerce Department agents working on a case to speak with a company's representatives about issues involving their firm. But what was unusual was the content of the message. Tim Teter, Nvidia's general counsel, said that Jeff Kessler, a top official at the department, had given Nvidia permission to reach out about the case.

The agents were alarmed that Nvidia had invoked the name of Mr. Kessler, their superior, who was nominated to his role by President Trump. Some viewed Mr. Kessler's interaction with Nvidia as violating government procedure and potentially tainting the case, according to current and former government officials and others familiar with the incident.

Nvidia’'s board said in a statement on Sunday that, while it has no reason to believe that either US national security or Nvidia secrets were compromised, its inquiry will examine all available information.

“The Board prioritizes US national and economic security, which is paramount to the interests of NVIDIA and its shareholders,†the company said. “The Board has confidence in Jensen and his leadership team and will provide further updates as appropriate.â€

Nvidia's shares pared losses from an 8% slide to now down 6%, extending last week's selloff ‌and pushing the stock to fresh multi-month lows.

At current levels, ‌the chipmaker would lose more than $280 billion in value from its last closing price, Reuters reports.

• Shares of Nvidia tumbled 5% at the opening bell Monday after the computer chip maker, central to the artificial intelligence race, opened an investigation into reports that CEO Jensen Huang was the “target of a foreign intelligence effort.†Nvidia's announcement of the investigation on Sunday followed Huang's acknowledgment that he had been intimate with a business executive who, according to the New York Times, US intelligence determined was gathering information for China.

• The New York Times reported in ​October that Donald Trump had been briefed last year on intelligence that Huang ‌had a close relationship ‌with a Chinese businesswoman who passed information to ‌Beijing. Speaking to reporters on Sunday, Trump downplayed the revelations about Huang, who is an influential adviser to the president on artificial intelligence, saying: “I think he's an honorable guy. I think he probably has an excuse for it.â€

• Republican lawmakers have expressed alarm, asking Huang to give the House foreign affairs and intelligence committees a closed-door briefing next week on Nvidia's “security protocols against foreign adversary espionage†and his relationship with Alice Huang or Huang Le, an executive at a Singapore-based datacenter company called Megaspeed, who is of no relation to the Nvidia CEO. She had previously been suspected of smuggling Nvidia chips to China, prompting American officials to surveil and monitor her.

• Axios reported on ​Sunday, citing a draft email by Huang to employees, that Huang admitted to having a romantic relationship with a suspected Chinese spy and took full â responsibility for his actions. “I was unfaithful to my ​wife. My ​actions hurt her ​and our children. There is no excuse ​for what ‌I did,†​Huang said ​in the draft email also seen by Reuters. Nvidia did not immediately respond to a request for comment on the Axios report.

• There's a small chance Huang is removed or steps down from the CEO post, wrote Dan Ives, partner and senior managing director at Yorkville Ives + Co., saying that Huang is “not replaceable.†“On the heels of last week's Blue Tidal Wave this will also increase momentum for more regulatory scrutiny in the Beltway especially around China and chip restrictions at a time the AI Arms Race is heating up into its next gear between the US and China,†Ives wrote.

• The company's board said in a statement on Sunday that, while it has no reason to believe that either US national security or Nvidia secrets were compromised, its inquiry will examine all available information. “The Board prioritizes US national and economic security, which is paramount to the interests of NVIDIA and its shareholders,†the company said. “The Board has confidence in Jensen and his leadership team and will provide further updates as appropriate.â€

• Briefing.com analyst Patrick O'Hare said that Nvidia was being treated as a one-off story by investors for the moment. “In other words, the stock is being penalised for Jensen Huang's personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn't caught up in the notion that this situation is going to have a systemic domino effect,†he said.

• The investigation also follows a rough few days on Wall Street for AI tech firms, particularly Nvidia. A sell-off of tech stocks that began earlier this month and gained steam with disappointing earnings led to a total decline of nearly $1tn in value off the tech-heavy Nasdaq exchange in one week and erased about $2tn in a month. A drop of 3.1% for Nvidia, previously worth about $5tn, whose chips have made it the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward recently.

Meanwhile, technology analyst Dan Ives, at the investment bank Yorkville Ives, said the crisis would at the very least spark congressional inquiries and “create an overhang on the stock for a myriad of reasonsâ€.

“This will add risk to the stock as he is so important to the Nvidia story and strategy globally,†Ives said.

“This will also increase major scrutiny regarding selling chips to China, which remains a key battleground issue in DC,†he added.

Briefing.com analyst Patrick O'Hare said that Nvidia was being treated as a one-off story by investors for the moment.

“In other words, the stock is being penalised for Jensen Huang's personal transgression, which has invited a great deal of uncertainty into the mix, but the market isn't caught up in the notion that this situation is going to have a systemic domino effect,†he said.