NVIDIA shares plunge 10% in two days ... $470 billion in market value at risk

[Financial News, New York — Correspondent Lee Byung-cheol] Jensen Huang, NVIDIA’s chief executive officer (CEO), is facing growing allegations of links to a Chinese spy, sending the company’s shares tumbling for a second straight day. Investor sentiment deteriorated sharply as new allegations emerged that a Chinese businesswoman who had an extramarital relationship with Huang helped supply Chinese companies with at least $7.5 billion worth of NVIDIA chips. NVIDIA is at risk of losing at least $470 billion in market value over two days.
On the 10th local time, NVIDIA shares fell more than 6%. After dropping 4.3% the previous day, they recorded steep losses for a second consecutive session. Microsoft (MS) briefly overtook NVIDIA to become the world’s second-largest company by market capitalization. It was the first time since June last year that Microsoft’s market value exceeded NVIDIA’s.
The immediate backdrop to the sharp share-price decline is that controversy over CEO Huang’s private life is spilling over into U.S. restrictions on exports of advanced semiconductors to China. The Information, a U.S. technology news outlet, reported that Huang’s relationship with Alice Huang helped supply Chinese companies with at least $7.5 billion worth of NVIDIA chips, citing two sources who know Alice Huang.
After U.S. export restrictions blocked semiconductor supplies, Alice Huang reportedly used her ties with NVIDIA and distributors to help bring about 240,000 AI chips, including NVIDIA H100s and H200 GPUs and some A100s, into China. Allegations have also emerged that some of the chips went to Alibaba, Tencent and small and midsize AI research labs in China.
Alice Huang also served as an executive at Megaspeed, a Singaporean company that has been under investigation by U.S. authorities. The Information reported that she used her personal relationship with CEO Huang to bolster her business credibility while keeping her role unclear and trying to leave no related documentary trail.
The fallout is fueling concerns about NVIDIA’s corporate governance and compliance with export regulations. After launching an internal investigation on the 8th, NVIDIA’s board appointed former acting U.S. attorney Jun Kim and the major law firm Wachtell, Lipton, Rosen & Katz to lead an independent investigation today. The FBI is also separately investigating whether CEO Huang was targeted in an operation by a foreign intelligence service.
Markets are watching to see whether the fallout could lead to tighter regulation across the AI industry, rather than remain an issue at a single company. In a report, Bank of America (BofA) analysts said, "The key investment question is whether this episode will remain an issue confined to an individual company or trigger regulation and business disruption across AI infrastructure as a whole."
However, they cautioned, "The fact that allegations have been made should not be equated with proof of actual harm to the business."



[email protected] Correspondent Lee Byung-cheol Reporter