TLDR
- Nvidia stock fell about 5% to 6% premarket Monday, near $175 to $176.
- The board opened an independent probe into CEO Jensen Huang’s relationship with an alleged Chinese spy.
- Huang holds a 3.4% stake and has no dual-class voting control.
- Goldman Sachs kept its Outperform rating and $300 target.
- Earnings are due Nov. 17.
Nvidia (NVDA) stock opened the week under pressure. It was down about 5% to 6% in premarket trading Monday, near $175 to $176.
The stock closed Friday at $186.64. It has dropped 18% in the past month and is on pace for its worst year since 2022.
The trigger is a board investigation into CEO Jensen Huang. It follows reports in The New York Times and The Financial Times about his relationship with a businesswoman.
U.S. intelligence agencies say Alice Huang, an executive at cloud company MegaSpeed, passed information to Beijing. Nvidia said Huang was the target of a “foreign intelligence effort.”
China’s Foreign Ministry called the “so-called Chinese spy narrative” unsubstantiated. Spokesperson Guo Jiakun made the remark Monday, according to Reuters.
What Nvidia and Huang Have Said
The board said in a Sunday statement that Huang fully supports the review. It also said it has “confidence in Jensen and his leadership team.”
In an email to staff, Huang said he had “fallen short.” He added, “I was unfaithful to my wife. My actions hurt her and our children.”
Huang has said he remains “fully committed” to the company. He stays on as CEO while the probe runs.
President Donald Trump said Sunday that Huang is “an honorable guy.” Elon Musk, Bill Ackman and Sequoia’s Shaun Maguire have also voiced support.
Why Huang’s Stake Matters
Huang holds a 3.4% stake in Nvidia, according to FactSet. Unlike Mark Zuckerberg at Meta Platforms, he does not have dual-class voting control.
That means the board or investors could, in theory, push him out. Barron’s noted there is no obvious successor.
Melius Research analyst Ben Reitzes said the firm had expected Huang to stay in the role for at least 10 more years. He pointed to Ian Buck, Michael Kagan, Bill Dally and Gilad Shainer as senior technical leaders.
Dan Ives of Yorkville Ives & Co. called talk of replacing Huang “comedy.” He also called the episode a “black eye moment.”
Joachim Klement of Panmure Liberum said the impact is contained to Nvidia for now. Intel, Marvell, Qualcomm and Arm were each down more than 1% in premarket trading.
Goldman Sachs analyst James Schneider kept an Outperform rating and $300 target Monday. He cited favorable positioning after the recent selloff.
Nvidia reports third-quarter earnings on Nov. 17. It also holds a major conference in Washington, D.C., at the end of the month.
