Nvidia Stock Drops 6% as Board Launches Probe Into CEO's Ties
Wachtell, Lipton, Rosen & Katz will determine if national security interests were compromised during Jensen Huang's relationship with a Chinese-linked executive.
By Anthony Foster ·
Nvidia shares fell by 6% on Tuesday, marking the second straight day of losses for the chipmaker. This drop followed a Monday decline of more than 4%, driven by new details regarding an independent investigation into CEO Jensen Huang.
The company's board of directors announced on Tuesday that it has retained the law firm Wachtell, Lipton, Rosen & Katz to lead the inquiry. The investigation will examine whether the company's proprietary secrets or U.S. national security interests were compromised during a specific period. The board hired Joon H. Kim, the former acting U.S. Attorney for the Southern District of New York, to conduct the review.
The decision follows Huang's admission over the weekend that he had a relationship with Alice Huang. U.S. intelligence agencies have connected Alice Huang to Chinese intelligence. Reports from The New York Times and the Financial Times indicated that agencies had surveilled her. They concluded that she passed information to Beijing and was actively involved with Chinese intelligence operations. Alice Huang is an Asian technology executive affiliated with Megaspeed, which is a customer of Nvidia.
Politicians and critics are now raising questions about what Nvidia knew regarding the sale of its restricted AI chips to various Chinese firms. This scrutiny comes as the company faces financial turbulence. Investors are increasingly concerned that the ongoing investigation could pressure the co-founder and CEO to step down from his position.
Huang acknowledged the affair and its impact on his family in an email to staff on Sunday. He wrote, "My actions hurt her and our children. There is no excuse for what I did." He emphasized his status as an American and his support for U.S. national security. An Nvidia representative stated that Huang is committed to continuing as CEO without interruption.
At the time of the announcement, the board indicated it had no reason to believe that national security or internal secrets had been compromised. The investigation by Wachtell, Lipton, Rosen & Katz will provide a definitive answer on that matter. Kim joined the legal firm earlier this month after serving as the chief U.S. prosecutor in Manhattan.
Nvidia's technology is used to train nearly all major AI models. The company serves as a vital source of financing for AI startups. Huang has frequently met with world leaders and other CEOs, serving as the public face of the company's expansion.
More Business · National news · Business Complaints · Report a business · Got a Story?
