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Nvidia shares plunged as much as 8% Monday, briefly threatening to erase roughly $350 billion in market value as investors weighed the possibility that CEO Jensen Huang could lose his job over an alleged Chinese intelligence operation.
For a company that has become the face of the artificial intelligence boom, that's a rather expensive scandal. And the investigation is just getting started.
Nvidia's board opened an independent investigation following reports that Huang had a romantic relationship with a business executive whom U.S. intelligence believes was recruited by China's Ministry of State Security.
Huang acknowledged being unfaithful to his wife in a message to employees, apologized and pledged to cooperate. Nvidia's board said it had no reason to believe company secrets or U.S. national security had been compromised, and expressed confidence in his leadership.
The allegations have not established that Huang disclosed sensitive information or knowingly cooperated with foreign intelligence. Investors, however, are already confronting the possibility of a much bigger problem.
Nvidia's market capitalization had declined from roughly $5.78 trillion on October 6 to $4.51 trillion by November 6, according to YCharts. That's approximately $1.27 trillion in lost value before the board publicly announced its investigation.
The latest controversy adds another risk to a stock already under pressure from questions about the sustainability of massive AI infrastructure spending.
Nvidia also carries enough weight to move the broader market. A November 6 snapshot placed the company at 6.93% of the SPDR S&P 500 ETF, which tracks the market-capitalization-weighted index of major U.S. companies.
At that weight, a 5.6% decline in Nvidia alone would subtract approximately 0.39 percentage points from the S&P 500's performance, assuming everything else remained unchanged—which most likely will not happen, considering Nvidia is the main hardware provider for many other companies in the country, including some in the top 10.
Yet the S&P 500 rose 1.48% Monday morning, while the Nasdaq gained 1.87%. Other semiconductor stocks also rallied, suggesting investors were treating Nvidia's troubles as largely company-specific rather than abandoning the broader AI trade.
Huang has led Nvidia since co-founding it in 1993. Replacing him would involve considerably more than finding another executive capable of presenting a new GPU.
The 63-year-old CEO has built an unusually centralized management structure and maintains important relationships with customers, suppliers and governments. Analysts have questioned whether Nvidia has an obvious successor.
Chris Weston, head of research at Pepperstone, told Reuters he didn't expect Huang to resign. But if investors genuinely believed his departure was imminent, the stock's reaction could be an "absolute bloodbath."
Bloodbath or not, the stock would be exposed to a lot of uncertainty. After all, Huang is the man responsible for building a whole imperium. It would be similar to Mark Zuckerberg leaving Meta, Elon Musk leaving Tesla or Vitalik Buterin disowning Ethereum. Beyond pure market analysis, Huang is the name behind Nvidia and market sentiment can react to that.
Dan Ives of Yorkville Ives & Co. similarly described Huang as not replaceable, although he acknowledged the investigation could ultimately result in his removal.
An extramarital affair alone does not automatically justify dismissing a CEO. Unless the scandal becomes a reputational risk for Nvidia, it’s possible that Huang escapes the scandal and markets recover as long as the company continues being extremely profitable. The more consequential question is whether Huang's conduct exposed sensitive information, created security vulnerabilities, or compromised Nvidia's business interests.
So far, the company has announced no findings establishing such failures.
A resignation could trigger another sharp selloff, particularly without a credible succession plan. But there is no reliable way to calculate how far the stock would fall, or whether investors would ultimately welcome new management.
Nvidia has been in a sustained bullish trend ever since ChatGPT entered the market in 2023. That said, its weekly chart was already flashing warning signs before the allegations emerged.
The stock traded near $179.34 Monday, significantly below its 50-week exponential moving average of approximately $199.16. That indicator tracks the longer-term price trend while assigning greater weight to recent trading.
The breakdown is particularly significant because Nvidia had spent much of its recent bull market above that average. Its last comparable breach occurred during the 2025 correction and the pre-ChatGPT era before that in 2022-2023.
The stock had already crossed below that indicator before the scandal, meaning the investigation accelerated an existing bearish trend rather than causing the entire breakdown.
Based on the weekly chart, several levels stand out:
These are potential price targets based on technical analysis, and a recovery above $190, followed by a move back above the 50-week EMA near $199, would improve the technical outlook.
Monday's weekly candle also remains unfinished, so a confirmed weekly close below the indicator would carry more weight than an intraday move.
President Donald Trump has already defended Huang, describing him as an honorable person who has done an exceptional job for the United States.
"I think he probably has an excuse for it. You have to hear it," Trump told reporters Sunday.
The president's support could help Huang politically, but the controversy comes as Nvidia navigates Washington's restrictions on advanced AI chip exports to China.
Huang has repeatedly advocated allowing Nvidia to sell processors to Chinese customers. Allegations involving a suspected intelligence operation could complicate those negotiations, even without evidence that the CEO knowingly participated in espionage.
China's Foreign Ministry has rejected the allegations as baseless.
Congressional Republicans have also requested a private briefing on Nvidia's security procedures, with lawmakers seeking Huang's agreement to a briefing date by November 11, according to Axios.
Investors have another important date approaching. Nvidia is scheduled to report its quarterly earnings on November 17, giving the market an opportunity to assess its underlying business against the uncertainty surrounding its CEO.
The board has not disclosed when its independent investigation will conclude.
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