TLDR
- Nvidia stock fell 5% to 6% premarket Monday, to about $175 to $176.
- The board opened an independent probe into CEO Jensen Huang’s relationship with an alleged Chinese spy.
- Huang holds a 3.4% stake and has no dual-class voting control.
- Goldman Sachs kept its Outperform rating and $300 target.
- Earnings are due Nov. 17.
Nvidia (NVDA) stock is trading lower Monday, and investors are watching the CEO’s chair closely. The stock was down 5% to 6% in premarket trading, near $175 to $176.
It closed Friday at $186.64. The stock has dropped 18% in the past month and is on pace for its worst year since 2022.
The cause is a board investigation into CEO Jensen Huang. It centers on his affair with Alice Huang, an executive at cloud company MegaSpeed.
U.S. intelligence agencies say she passed information to Beijing, according to The New York Times and The Financial Times. Nvidia said Huang was the target of a “foreign intelligence effort.”
China’s Foreign Ministry called the “so-called Chinese spy narrative” unsubstantiated. Spokesperson Guo Jiakun made the remark Monday, per Reuters.
What Huang and the Board Said
In an email to staff, Huang said he had “fallen short.” He wrote, “I was unfaithful to my wife. My actions hurt her and our children.”
The board said Huang is cooperating with the review. It also said it has “confidence in Jensen and his leadership team.”
Huang remains CEO while the probe runs. He has said he is “fully committed” to Nvidia.
President Donald Trump called him “an honorable guy” on Sunday. Elon Musk, Bill Ackman and Sequoia’s Shaun Maguire have also voiced support.
Why the Drop Is Not Bigger
Barron’s said a 6% dip is smaller than expected if investors thought Huang was on his way out. Dan Ives of Yorkville Ives & Co. called talk of replacing him “comedy.”
Still, Huang holds a 3.4% stake, according to FactSet. Nvidia has no dual-class stock, unlike Mark Zuckerberg’s Meta Platforms.
Melius Research analyst Ben Reitzes said there is no clear successor. He had expected Huang to stay in the role for at least 10 more years.
Joachim Klement of Panmure Liberum said the impact is contained to Nvidia for now. Intel, Marvell, Qualcomm and Arm were each down more than 1% premarket.
Goldman Sachs analyst James Schneider kept an Outperform rating and $300 target Monday. He said positioning looks favorable after the recent selloff.
Nvidia reports third-quarter earnings on Nov. 17. It will also hold a major conference in Washington, D.C., at the end of the month.
