Nvidia Scandal: Nvidia, once a favourite among investors riding the artificial intelligence (AI) boom, is facing mounting scrutiny after shareholders filed a class-action lawsuit against CEO Jensen Huang and the company over his affair with Alice Huang, suspected of having links to Chinese intelligence.
The lawsuit has brought the chipmaker's leadership, corporate governance and potential national security exposure under the spotlight. The controversy also involves Singapore-based Megaspeed, the woman's former employer, which has faced scrutiny over suspected links to the movement of advanced Nvidia chips into China. Huang has acknowledged the affair and apologised.
The controversy has already taken a toll on Nvidia's market valuation. Its shares declined 4.27% on the New York Stock Exchange on Monday, wiping out $192.1 billion in market capitalisation in a single session. The AI stock extended its losses on Tuesday, down another 5.5% to $168.89 per share. Nvidia's market cap dropped to $4.08 trillion, wiping out over $420 billion in just two sessions.
The shareholder lawsuit has added to investor concerns, with plaintiffs arguing that the revelations and potential national security implications were responsible for the losses.
A group of shareholders filed the lawsuit in the US District Court for the Northern District of California on Monday, accusing Huang and Nvidia of violating federal securities laws. They are seeking compensation for losses suffered after the revelations triggered a sell-off in the company's shares.