Over the past few years, Nvidia founder and chief executive officer (CEO) Jensen Huang has ridden the artificial intelligence (AI) boom, transforming his image from a tech “geek” into a globally feted technology superstar.
But an extramarital affair involving allegations of Chinese espionage has not only severely damaged his personal reputation, but also thrust chip giant Nvidia, valued at US$4.5 trillion (about S$5.85 trillion), into a storm over corporate governance, national security and leadership stability.
Huang publicly admitted on Sunday (8 November) that he had been unfaithful to his wife and apologised for his conduct. Nvidia’s board announced the same day that it had formed a committee of independent directors and engaged independent external legal counsel to investigate whether Huang had been targeted by a foreign intelligence agency.
The controversy quickly shook market confidence. Nvidia shares fell 7.29% at the open on Monday (9 November), but later pared their losses. As of 11pm Singapore time, the stock was down 4.37% at US$178.48.
With investors already concerned about whether AI investment can continue to deliver returns, and US technology stocks facing a recent sell-off, Jensen Huang’s personal troubles have undoubtedly added to the pressure on Nvidia shares. The stock is now at its lowest level since early April this year.
From a personal scandal to a national security issue
A central figure in the affair is Alice Huang, a former executive at Singapore-registered cloud computing services company Megaspeed. Despite sharing the same surname, she is not related to Jensen Huang.
The UK’s Financial Times reported on 6 November that US intelligence agencies suspected Alice Huang had been recruited by China’s Ministry of State Security to conduct espionage and had developed an intimate relationship with Jensen Huang.
In an interview with Bloomberg last month, Jensen Huang continued to insist that their dealings were part of a normal business relationship. But on Sunday, he finally admitted to the affair, saying: “My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry.”
However, Nvidia’s board stressed that it currently had no reason to believe US national security or company secrets had been compromised, and that it retained confidence in Jensen Huang. Jensen Huang will also cooperate fully with the investigation.
Nvidia shares under pressure as ‘Jensen Huang premium’ faces a test
Kenneth Goh, director of private wealth management at UOB Kay Hian, told Lianhe Zaobao (LHZB), “The share price is reacting to uncertainty over how long the investigation will take and what it will find. TSMC shares rose on Monday, suggesting investors have yet to treat the investigation as a threat to global chip demand.”
Nvidia will release its quarterly results on 17 November, and the chairs of three US House of Representatives committees have asked Jensen Huang to attend a closed-door briefing the following day. The two consecutive events will be a focus for investors.
Goh said Nvidia shares had previously enjoyed a degree of “Jensen Huang premium”. “Part of the Jensen premium comes from his ability to speak directly to officials in Washington and Beijing about chip export policy. The risk is that officials become more cautious about having those conversations with him.”
This means the market is concerned not only about whether Huang can continue to lead Nvidia, but also about whether the political influence and business relationships he has built will be weakened.
Can Nvidia withstand losing Jensen Huang?
Jensen Huang co-founded Nvidia in 1993 and remains actively involved in product development, customer relations and global strategy. More than 60 executives report directly to him, underscoring how heavily the company’s decision-making depends on its founder.
As of the end of March this year, Jensen Huang held about 3.58% of Nvidia’s shares, but had no special voting rights. Although both his children work at Nvidia, the company currently has no obvious successor.
Jeremy Tan, CEO of Tiger Fund Management, said in an interview that how the affair ultimately unfolds would depend on whether the board’s independent investigation uncovers any misconduct.
Tan said, “Jensen Huang, Nvidia’s founder and CEO, is central to the company’s strategy and to its position as a global semiconductor leader. Any development affecting his leadership could therefore have implications for Nvidia’s share price.”
However, he stressed that it was still too early to draw conclusions.
Beyond the risks to its leadership, Nvidia’s ties with the Chinese market could also be affected. According to Nvidia’s report for its second financial quarter, which ended in late July this year, revenue from China was close to US$8 billion, accounting for about 8% of total revenue.
Some analysts have suggested that if the US further tightens export controls as a result of the affair, Nvidia could lose some China-related business, while Chinese chipmakers such as Huawei could step up their efforts to capture market share.
As for Megaspeed, US authorities had already been investigating whether it helped Chinese companies circumvent chip export restrictions. Those allegations, however, have yet to be conclusively substantiated.
The broad market consensus is that whether this crisis ultimately puts sustained pressure on Nvidia’s share price will hinge not on Huang’s private life, but on whether the investigation uncovers corporate governance failings, whether the US tightens chip export restrictions, and whether Jensen Huang can remain at the helm.
