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Nvidia stock was down 4.51% ahead of the US markets opening, as the company announced that its board had launched an “independent investigation” following reports that founder and CEO Jensen Huang may have been targeted in a foreign intelligence effort.
“A committee of independent directors, assisted by outside independent counsel, will oversee the investigation,” an Nvidia statement said on its website.
The company further highlighted that the board prioritises US national and economic security, which it said is “paramount to the interests of Nvidia” and its shareholders.
“While the board has no reason to believe that either national security or Nvidia secrets were compromised, the board’s inquiry will examine all available information,” the company also noted.
“Jensen fully supports the review and has committed to cooperating with it.
“The board has confidence in Jensen and his leadership team and will provide further updates as appropriate,” Nvidia concluded.
Meanwhile, China denied on Monday there was a spy plot attempt to ensnare the Nvidia CEO, calling the spying allegations unsubstantiated and a smear campaign against Beijing.
Dan Coatsworth, head of markets at AJ Bell, commented on the claims and potential market impact: “How boards view undisclosed CEO romantic relationships often depends on who is involved. Relationships with colleagues can raise conflicts of interest and favouritism concerns, while those outside the company are usually private unless they pose security, reputational or company-resource risks.
“Nvidia chief executive Jensen Huang is in a precarious position, and the dial on his situation currently sits at ‘highest risk’. Personal scandals never sit well in the corporate world, let alone ones where the CEO is being investigated for an affair with a suspected foreign spy,” he said in a note sent to Euronews Business.
“Given pre-existing sensitivities around China accessing US technology, and various export restrictions already in place, Nvidia’s situation is going to be treated with intense scrutiny. It wouldn’t be a surprise to see Jensen Huang step aside on a temporary basis while an investigation takes place.
“Even if Jensen Huang is found not to have discussed any confidential information with the woman in question, the affair is not a good look for a company that prides itself on family-based cultural values. It’s plausible that Jensen Huang might decide to step down as CEO if he thinks the incident has tarnished the company’s reputation, as well as his own. Or the board might decide he has to go,” he added.
“Yet one could see why Nvidia’s board might be keen to back Jensen Huang and not lose him. He has been the architect of Nvidia’s success, making it the go-to place for advanced AI chips, and making shareholders seriously rich along the way. He is the face of Nvidia, and many shareholders big and small might prefer him to stay put if it means a continuation of the current strategy,” Coatsworth concluded.
Additional sources • AP/ AFP