Nvidia shares tumbled more than 8% in opening trade on Monday, wiping billions off the semiconductor giant's market capitalization after its board initiated an inquiry into Chief Executive Jensen Huang. The rout followed a 5% slide in premarket trade. Selling accelerated as institutional desks digested disclosures that the co-founder and face of the artificial intelligence boom is under review over suspected contact with an alleged foreign intelligence operative.
The board probe centers on Huang’s relationship with Alice Huang, a former executive at Singapore-based cloud company Megaspeed who is not related to him. United States authorities previously investigated her and concluded she operated as an asset for Chinese intelligence. Now, an independent committee of Nvidia directors has enlisted external legal counsel to supervise a formal review. Huang has pledged complete cooperation with the inquiry.
The governance shock coincides with an expanding regulatory dragnet. Megaspeed, a Singapore-based buyer of high-performance Nvidia hardware, faces an active investigation by US authorities over suspicions it helped Beijing bypass trade restrictions to obtain advanced AI processors. Inquiries focus on whether Alice Huang leveraged access to the Nvidia chief to channel critical information across the Pacific.
The selloff tests a historic equity rally. Nvidia's valuation rocketed from $420 billion in late 2022 to $4.5 trillion as of November 6, cementing its status as the world's second most valuable company on the back of hyperscaler chip orders. But the investigation handed institutional traders an immediate catalyst to trim exposure. “This was just the cherry on top for investors looking to pull out of AI-linked stocks,” said Nadia El Bilassy, senior market analyst at Equiti Group, noting that tech volatility could stabilize later in the week ahead of scheduled inflation readings.
Brokerage Bernstein held its "outperform" rating on Nvidia with a $400 price target, calculating that the boardroom drama will not dent operational demand for the company's Blackwell and Hopper graphic processing units. Yet the brokerage cautioned that regulatory friction will intensify. The episode provides immediate ammunition to lawmakers in Washington, where scrutiny over AI export leakage to Beijing remains a bipartisan fixation. For fund managers tracking corporate governance risk, the focus shifts to how swiftly the independent directors can conclude their inquiry without destabilizing the executive suite.