Nvidia stock fell for a second straight day on Tuesday, closing down 5.5 percent at $168.89, as new reporting deepened the board investigation into chief executive Jensen Huang. The two-day slide has wiped about $430 billion off the company’s market value, according to Reuters, and Tuesday’s close was the stock’s lowest since late March.
The story began on Sunday, when Nvidia’s board announced an independent investigation into reports that Huang was the target of a foreign intelligence effort, as our earlier report on the Nvidia board probe explained. The board said it has no reason to believe national security or company secrets were compromised, and Huang stays on as chief executive while the inquiry runs. Here is what changed on Tuesday.
New reports tie the probe to chip shipments to China
The biggest new detail concerns the chips themselves. The Information reported that Alice Huang, the former Megaspeed executive at the center of the story, built a network of companies with her husband and sister that moved about 240,000 Nvidia processors into China. The chips, including restricted H100, H200 and A100 models, were worth about $7.5 billion, and some ultimately served Alibaba, Tencent and smaller Chinese AI labs. When orders for restricted chips stalled, she used her ties to Nvidia to secure supplies, according to the report.
The Financial Times reported that several US agencies have pushed for Megaspeed to be placed on the government’s entity list, a trade blacklist, but that the Commerce Department has been delaying the move. Huang has told employees he was unfaithful to his wife but has given no details about the relationship, Reuters reported.
Pressure builds in Washington
The New York Times reported on Tuesday that Secretary of State Marco Rubio briefed President Donald Trump about the intelligence aboard Air Force One in May, on a trip to China. It was at least the second time in seven months that Trump had been told, the Times reported. A White House official disputed the report and pointed back to Trump’s comments on Monday, when the president said the FBI is examining whether Huang was targeted and that Huang told him he had “absolutely no idea” the woman was a spy.
Senate Democratic Leader Chuck Schumer demanded a full accounting of Trump’s defense of Huang and urged lawmakers to quickly approve new restrictions on chip exports to China. “He’s supposed to protect America, not China, not his friends,” Schumer said. Inside the company, the board has hired Joon Kim, a Wachtell Lipton partner and former acting US Attorney for the Southern District of New York, to lead its investigation. Huang apologized to top executives on Monday and was back holding meetings at headquarters on Tuesday, CNBC reported.
A lawsuit, and a split on Wall Street
The legal fight also took shape. Rosen Law Firm filed a proposed class action in federal court in San Jose, California, accusing Huang and Nvidia of misleading shareholders; the complaint runs 19 pages and builds on the filing first reported on Monday. Analysts split on what the probe means for the stock. Citi’s Atif Malik kept his buy rating but cut his price target to $285 from $315, calling the investigation an overhang that could overshadow next week’s results. Wells Fargo’s Joe Quatrochi cut his target to $300 from $315. Dan Ives estimated that investors see roughly a 15 percent chance Huang is removed, and said the review could take 4 to 6 weeks. Cathie Wood’s ARK Invest went the other way and bought about 90,000 shares on Monday.
What happens next
Two dates now dominate the story. Nvidia reports its quarterly earnings on November 17, and Huang faces a closed briefing with House committees on November 18. The board has given no timeline for its findings. For now, the shares sit about 30 percent below the record high they set in early October, and the company is worth about $4.1 trillion, down from its peak but still one of the most valuable firms in the world. Follow the next developments in our Technology coverage.
Sources: Reuters; The Information; The New York Times; Financial Times; Investor’s Business Daily; The Times; Finnhub closing data.