Nvidia’s market capitalisation fell by more than $400 billion in two days after news about its founder and CEO, Jensen Huang, compounded recent tech weakness.

On 29 October, the reported that the US security community thinks Chinese businesswoman Alice Huang (no relation to Jensen Huang) was a Chinese intelligence asset and had developed a close relationship with the Nvidia CEO.

On 8 November Jensen Huang appeared to acknowledge an extra-marital relationship in an email sent to all Nvidia (NASDAQ:NVDA) staff in which he said: “I owe my family and all of you an apology. I was unfaithful to my wife.” His statement did not name Alice Huang or Megaspeed, the Singapore-based cloud computing company at which she is a senior executive. Neither Alice Huang nor Megaspeed have commented publicly on the allegations. has approached Megaspeed for comment.

Nvidia’s board said it has “no reason to believe that either national security or Nvidia secrets were compromised” but that it would launch an inquiry to “examine all available information”. The Chinese government has denied targeting Jensen Huang.

Shares in the chipmaker fell 4.3% on 9 November and a further 5.5% the following day, wiping around $430 billion off its market value, as speculation has mounted over whether Nvidia’s founder can continue in his role.

Nvidia falls further after tech selloff

The reports followed a bruising period for Nvidia’s market performance. Since reaching their all-time high of $243.37 on 6 October, Nvidia’s shares fell 23.3% over the following month.

During that period, concerns over whether or not current levels of spending on artificial intelligence (AI) infrastructure are sustainable led to a selloff in tech stocks. This was further exacerbated by the Democrats’ strong performance in the US midterms, which many believe could lead to policies aimed at slowing down the pace of data centre buildout.

As the main beneficiary of this AI spending, Nvidia’s shares were hit hard, and the latest developments have compounded the pessimism around Nvidia.

Dan Ives, partner and senior managing director at merchant bank Yorkville Ives, said: “This is a black eye moment for Jensen [Huang] and will spark multiple congressional inquiries at a minimum and will create an overhang on the stock for a myriad of reasons.”

Huang’s future as leader of Nvidia is the pivotal question according to Ives. He described Huang as “the core DNA of Nvidia… he is not replaceable” and added that “the investigation will be key and we would expect Jensen to continue in his role as CEO with no interruption in the near-term”.

Should you buy the dip in Nvidia shares?

Despite the controversy, private investors appear to be taking advantage of the selloff in Nvidia shares.

Investment platform Freetrade, which has 1.6 million registered users in the UK, registered the highest value of executed buys for Nvidia shares seen on the platform in a single day on 9 November, the first trading day after Nvidia and Jensen Huang released their statements.

“Fundamentally, their assessment may be that, while the evolving controversy surrounding Huang could compromise his leadership, the fallout will have little impact on Nvidia’s dominant position and prospective chip demand,” said Duncan Ferris, analyst at Freetrade. “After all, the AI buildout is bigger than one man.”

Other Nvidia investors are less positive, though. A class action lawsuit has been launched against Huang and the company over the alleged affair, while Donald Trump said on 9 November that the FBI was investigating it.

“There is a risk that the political fallout could translate into tighter restrictions on chip sales to China, just as Nvidia is trying to defend its position in a fiercely competitive global AI market,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club. “It's little wonder the shares are coming under so much pressure.”