Nvidia brings in Wachtell to probe CEO Jensen Huang’s conduct
The chipmaker's board has hired a prominent New York firm as reports of a Chinese spy link and a second affair rattle investors.
Key points
- Nvidia's board hired Wachtell, Lipton, Rosen & Krat to investigate CEO Jensen Huang's relationship with an alleged Chinese spy.
- Huang admitted to an unfaithful marriage but did not directly name the woman linked to the espionage claims.
- The Wall Street Journal and New York Times reported a second affair with an executive who reports to Huang.
- Nvidia shares fell more than 8% in extended trading after the second report.
- Huang will keep leading the company during the investigation, which has no set timeframe.
Nvidia has hired a leading United States law firm to carry out an independent investigation into its chief executive, Jensen Huang. According to The Guardian, the chipmaker’s board chose Wachtell, Lipton, Rosen & Katz for the task. The inquiry will be led by Wachtell partner Joon Kim, and independent board directors will supervise it.
The probe centres on the relationship between Huang and an alleged Chinese spy, Alice Huang, who was also a customer of Nvidia. She is not related to the chief executive. The company is dealing with an espionage scandal after reports of the link, and it has said Huang is the target of a foreign intelligence effort.
Read also: Nvidia investigates CEO Jensen Huang over alleged spy affair
Huang’s admission and a second report
Nvidia first denied any improper relationship. On Sunday, Huang admitted that he had been unfaithful to his wife, but he did not refer directly to Ms Huang in his remarks. No timeframe has been set for the investigation.
The Wall Street Journal and the New York Times then reported that Huang had another affair, this time with an executive who reports to him. Nvidia shares fell by more than 8% in extended trading after those reports. The company’s market value had already dropped by about $311bn since Friday, though shares had recovered somewhat on Wednesday, closing up 2.9% at $173.73.
The Journal also reported overnight that the board was preparing to remove Huang. Nvidia has stated that Huang remains in charge of the firm he helped found, and that his leadership will not be paused. The company has not confirmed the Journal’s report about his position.
Views on Huang’s future
Dan Ives, a technology analyst, wrote in a note to investors that investor chatter put the chance of Huang being removed as chief executive at about 15%. He said a board investigation could take four to six weeks and would weigh on the stock until more news emerged. Jeffrey Sonnenfeld of the Yale School of Management put Huang’s chances of surviving the crisis at about 50-50.
US ambassador to China David Perdue also commented on the case. He said the situation showed that the country had to stay alert, and he linked national security to economic security. He spoke to Bloomberg Television and said relations with China were currently difficult.
Why the story matters
Nvidia, which is valued at $4.1tn, is one of the largest chipmakers, and the affair reports and espionage concerns have drawn wide attention. Investors are watching closely for the outcome of the inquiry.
The law firm has a strong reputation. Its founding partner, Martin Lipton, is credited with inventing the poison pill defence in the 1980s. Joon Kim worked as an interim federal prosecutor in New York from 2017 to 2018, overseeing a team that handled fraud and corruption cases. In 2021 he investigated sexual harassment allegations against former New York governor Andrew Cuomo.
Separately, shares in the AI infrastructure company CoreWeave jumped more than 24% after it reported strong revenue growth, which lifted AI stocks more broadly. Nvidia’s next steps, and any finding from the investigation, remain unknown.
Related: Nvidia shares fall after probe into CEO Jensen Huang’s affair
Frequently asked questions
Who is leading Nvidiau0026#039;s investigation into Jensen Huang?
The investigation is being led by Joon Kim, a partner at Wachtell, Lipton, Rosen u0026amp; Katz. Independent board directors will supervise the work, according to The Guardian.
Is Jensen Huang still Nvidiau0026#039;s chief executive?
Nvidia has said Huang remains in charge during the probe. Reports said the board was preparing to oust him, but the company has not confirmed that.
Why did Nvidia shares fall?
Shares fell more than 8% in extended trading after the Wall Street Journal and New York Times reported a second affair involving an executive who reports to Huang.
Sources
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