Nvidia's shares slid for a second straight session, wiping out roughly $430bn in market value over two trading days, after allegations involving chief executive Jensen Huang and a former tech executive suspected of links to Chinese intelligence unsettled investors. The stock fell 5.47% to $168.89, pressured by a lawsuit filed this week in California against the chipmaker and Huang personally.
The allegations centre on a reported personal relationship between Huang and businesswoman Alice Huang, who is a former tech executive and previously worked as a Chinese banker. Alice Huang is suspected of links to Chinese intelligence. The allegations remain unconfirmed and are under investigation, and no finding of wrongdoing has been made against either person.
The California suit alleges that shareholders were misled by undisclosed national security concerns. It is one of the developments that has put the company's governance under scrutiny at a time when its shares are closely watched as a bellwether for the artificial intelligence boom. Commentary in the media has also urged Huang to step down while the controversy plays out, and some commentators have publicly called for him to quit.
To address the matter, the company's independent directors have retained the law firm Wachtell Lipton to conduct an investigation. The inquiry is led by former prosecutor Joon Kim. It is examining whether foreign intelligence activity was involved and whether company information was compromised.
Nvidia has said it has no reason to believe that secrets were compromised and that national security is not known to be compromised. The company's position is that the allegations have not been substantiated, and the investigation is intended to establish the facts.
The lawsuit may also embolden shareholders who are already pursuing claims against the company, adding pressure on the board. Market observers are treating the episode as a test of institutional investor confidence in one of the most valuable companies in the technology sector, and how the board handles the inquiry is likely to shape that confidence in the coming weeks.