Nvidia scandal: Is Jensen Huang’s affair chipping away at the stock’s valuation?

Résumé détaillé

What Jensen Huang’s affair with an alleged Chinese spy means for the chipmaker’s shares, AI demand and investor outlook Read more at straitstimes.com.

Nvidia lost US$190 billion in market value after the company announced it would investigate CEO Jensen Huang’s affair with Alice Huang.

SINGAPORE – Nvidia’s chief executive Jensen Huang was sued on Nov 9 in a proposed class action following revelations of his affair with an alleged Chinese spy, fuelling uncertainty around the future of the chipmaker’s co-founder and worries over the likelihood of another Wall Street slump.

Markets had begun to recover from last week’s massive tech sell-off after the US mid-term elections, with both Nasdaq and the S&P 500 closing more than 2% higher on Nov 9. Asian tech stocks were also buoyed by the positive momentum, with both chipmakers and semiconductor equipment companies seeing gains on Nov 10.

But while fears of a Democrat-led pushback against AI advancement have cooled slightly, Nvidia is now under even more pressure as it faces accusations of defrauding shareholders by concealing Huang’s affair with an alleged Chinese spy.

The company’s shares closed 4.3% lower on Nov 9 after it announced a probe into the scandal the day before, resulting in its market capitalisation shrinking by around US$190 billion.

All eyes will be on Nvidia’s next moves, which could decide whether Huang – the company’s first and only CEO – will continue to lead the company, and the longer-term impact on its business.

At this point, existing investors may be wondering what to do with their Nvidia shares, while prospective ones might be watching for opportunities to buy the shares at a bargain.

While Nvidia’s share price has fallen by around 14% over the past week, analysts told The Straits Times that recent developments may not have a significant impact on the company’s trajectory as its core business fundamentals are still strong.

AI demand remains high and growing, with hyperscalers planning to increase capital expenditure spending on semiconductor chips over the next two years.

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