Nvidia hires former federal prosecutor to lead Huang probe as shares slide for a second day
The board retained Wachtell Lipton and ex-U.S. attorney Joon Kim to run the inquiry as the stock fell again Tuesday, with the FBI, Congress and shareholder litigation now circling the AI bellwether.
Nvidia's headquarters in Santa Clara, California
Nvidia's independent directors have retained the law firm Wachtell, Lipton, Rosen & Katz and former acting U.S. attorney Joon H. Kim to lead an investigation of chief executive Jensen Huang, the company said Tuesday, as the chipmaker's shares fell for a second straight session. The board described the work as a "thorough and independent" inquiry, The Next Web reported, and said it is the same review it announced on Sunday.
The board opened the inquiry after reports that Huang had been the target of a foreign intelligence effort. U.S. intelligence agencies concluded that Alice Huang, an executive at Singapore-based data center company Megaspeed, was passing information to Beijing, according to reports in The New York Times and the Financial Times that CNBC summarized. The two are not related. Huang told employees in an email that he had been unfaithful to his wife, CNBC reported, without giving details. China's Foreign Ministry has dismissed the spying claims as a smear, Al Jazeera reported, and Nvidia has said its board has no reason to believe that national security or company secrets were compromised.
You might be interested in
Investors have punished the stock. Nvidia fell 4.3 percent on Monday to close at $178.67, the Associated Press reported, and slid roughly 5.5 percent more on Tuesday, according to CNBC. Its market value briefly dipped below $4 trillion in afternoon trading before recovering to close above that mark. The shares were already down about 23 percent over the previous 30 days as worries about an AI-sector bubble weighed on the group, and they hit an all-time high only last month.
Analysts have mostly argued that Huang is unlikely to be forced out, while acknowledging the uncertainty. Dan Ives of Yorkville Ives & Co. put the odds of his removal at roughly 15 percent and said a board investigation could take four to six weeks, leaving an overhang on the stock until more news emerges, CNBC reported. Huang is Nvidia's fifth-largest shareholder with a stake of about 3.6 percent, according to LSEG data cited by Al Jazeera, but unlike the founders of some other major technology companies he does not hold majority voting control.
The story widened on Tuesday. The Information reported that Huang's relationship with Alice Huang, which it said dated to 2023, helped facilitate shipments of at least $7.5 billion worth of Nvidia chips to Chinese companies through a network of firms she built with her husband and sister, Reuters reported, citing two people who know her. 24/7 Wall St. noted that Reuters could not independently verify the claim, and Nvidia did not immediately respond to a request for comment. Separately, a Reuters review of shipping records found that Megaspeed's Indonesian subsidiary imported Nvidia hardware, including H100 processors, between 2024 and 2026, though shipments into Indonesia do not by themselves show that the chips were diverted to China or that export rules were broken, Indian Television summarized.
Washington has become directly involved. President Donald Trump said Monday that the FBI was looking into the matter while saying he believed Huang had no idea the woman was a spy, Reuters and NBC News reported, and an NBC source said the Justice Department's separate criminal investigation of Megaspeed also examines whether the company smuggled Nvidia chips into China. Senate Democratic leader Chuck Schumer called for a full accounting of Trump's defense of Huang and urged lawmakers to quickly approve new restrictions on U.S. chip exports, The Globe and Mail reported. A proposed shareholder class action filed Monday in federal court in San Jose accuses Nvidia and Huang of misleading investors about the relationship and the company's dealings with Megaspeed, according to CNBC.
The next test comes quickly. Nvidia is scheduled to report fiscal third-quarter results on November 17, The Motley Fool noted, its first report since the record $96.2 billion quarter it posted in August. Three House Republican committee chairs have also asked Huang to meet privately with lawmakers later this month, Quartz reported, and the board has said it has confidence in Huang and his leadership team.