Nvidia Shares Drop 4% After Board Opens Probe Into CEO

Nvidia stock declined by more than 4% on Monday morning, settling at $178.83.

The California-based chipmaker announced on Sunday that its board of directors launched an independent investigation into CEO Jensen Huang. The company stated that the review was initiated due to recent reports suggesting Huang was the target of a foreign intelligence effort. A committee of independent directors, aided by outside legal counsel, will oversee the process.

In an internal message shared with employees, Huang acknowledged that he was "unfaithful" to his wife. He stated that his actions hurt his family and apologized for the incident. The memo did not name the specific individual involved. Huang added that he felt he had fallen short of his responsibility to serve the company and its shareholders, and he expressed his commitment to protecting Nvidia and supporting America’s national security.

The investigation follows a report from The New York Times published late last month. That article claimed U.S. intelligence officials identified Alice Huang, a senior executive at Singapore-based data firm Megaspeed, as a key figure in an espionage plot. Officials determined she had developed a close relationship with Jensen Huang and was funneling information to Beijing. A spokesperson for Nvidia previously told ABC News that interactions between the two were part of Jensen Huang's professional duties and were not unusual.

The Chinese government rejected the allegations, describing them as baseless and slanderous. Neither Alice Huang nor Megaspeed International responded to requests for comment from ABC News after the initial story broke. Nvidia remains the world's second-largest company by market capitalization, with a value exceeding $4 trillion as of Monday. Apple holds the top position.

The chip giant has seen strong revenue growth in recent years, driven by demand for hardware used in artificial intelligence systems. This growth has occurred despite political scrutiny of data centers and concerns about a potential financial bubble in the AI sector. Huang said he fully supports the board's review and will cooperate with the investigation.

Broader U.S. stock markets recovered on Monday, reversing some of the losses seen in a selloff on the previous Thursday. The Dow Jones Industrial Average rose by 1.4%, the S&P 500 increased by 1.7%, and the Nasdaq Composite jumped by 2.2%.