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By Giulia Carbonaro
Senior Reporter
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Nvidia shares sank on Monday after the company, one of the world’s most valuable, announced it had opened an investigation into CEO Jensen Huang’s alleged relationship with a Chinese woman whom U.S. intelligence agencies allege is a spy for Beijing.
Huang has admitted to having an extramarital affair, apologizing to his wife, children, colleagues, partners and shareholders in a message to Nvidia employees and acknowledging that the “hurt” he caused to his family has “fallen short” of his responsibility to the company. He did not confirm that he was having a close relationship with the woman identified by U.S. intelligence agencies as suspected spy Alice Huang. Huang, also known as Huang Le, had been a top executive at Megaspeed, a Singapore-based cloud computing firm that is the largest buyer of Nvidia’s chips in Southeast Asia.
China’s Foreign Ministry dismissed allegations that the woman was a spy, calling them “unsubstantiated” and describing them as “smears.”
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Newsweek contacted Nvidia for comment by email on Monday morning and Tuesday morning, outside normal working hours.
The controversy has sent shockwaves through the AI industry, as Huang has made himself the unshakable face of Nvidia since founding the company in 1993. With his reputation taking a blow by reporting of the alleged affair, Nvidia—a $4.5 trillion Silicon Valley behemoth—is also suffering.
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Nvidia Takes a Hit in the Markets
Shares of the chipmaker fell 4.3 percent on Monday, or $7.97, to $178.67, after the company announced the launch of its independent investigation, even as the Nvidia board reassured that they have “no reason to believe that either national security or NVIDIA secrets were compromised.”
The drop wiped out nearly $200 billion in value for the company. Huang is the largest individual holder of shares outside of investment funds. According to his September filing, Huang owned 811.5 million Nvidia shares, worth approximately $145 billion at Monday’s closing price.
The losses might have chipped away at Huang’s enormous fortune, but the loss is significant even by a multibillionaire’s standard. According to Forbes, Huang’s net worth was $155.4 billion on Tuesday, down $6.8 billion, or 4.19 percent, from the day before.
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While Nvidia may suffer, Huang is expected to take the brunt of the scandal, which has raised questions of whether he truly is irreplaceable at the company’s helm, and threaten to undo his marriage. So far, the Nvidia board has said it “has confidence in Jensen and his leadership team and will provide further updates as appropriate,” suggesting it is not considering removing Huang or asking him to step down.
President Donald Trump, to whom Huang has grown close in recent years, has thrown his support behind the Nvidia CEO, saying he is “a fine person” and telling reporters he should continue leading the company. “I think so. Oh yeah, sure,” Trump said on Fox News on Sunday.
Trump’s backing may not be enough to stop investors from panicking in reaction to news of Nvidia’s investigation. But Huang has tied his persona so close to the company that he might survive the storm, what could be a career-ending scandal for others.
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Scandal Threatens to Upend Huang’s Life
While Nvidia is one of the world’s most powerful AI companies and a key player in the U.S.-China race to develop the most advanced AI on the planet, the company is a family business at its core for Huang.
Huang founded Nvidia at age 30, keeping the promise he made to his future wife, Lori Mills, when they were studying electrical engineering at Oregon State University that he would become CEO by then. The two have been together for more than 40 years, and their two children, Spencer and Madison, are employed by Nvidia.
The visionary billionaire has apologized to his wife and children for having an extramarital affair, admitting there is “no excuse” for his action but pleading for his family to accept his attempt to “earn back” their trust.
“Throughout my life, my family has given me love and support. They deserve my honesty and loyalty. Instead, I let them down and damaged the life we built together. I take full responsibility for what I did and the hurt I caused, and I accept the criticism that comes with it,” he wrote in a note to Nvidia staff.
“To my wife and family: I love you. I know an apology cannot undo what I have done. I hope our family will heal and that, over time, I can earn back your trust.”
His wife has not yet publicly commented on the alleged affair, and it’s unclear whether she will decide to leave Huang or stay with him. Should she decide to divorce him, Huang risks losing a significant part of his fortune, though it is unclear just how much of his wealth his wife would be entitled to.
The two have been married since 1985, five years after they met as students when he was 17 and she 19. While it is unclear whether the two signed a prenuptial agreement in 1985, most of the Nvidia CEO’s shares of the company are held in trusts in which both spouses are co-trustees.
According to Huang’s September filing, 467.7 million shares of the total 811.5 million Nvidia shares he owns were in the living trust he shares with Mills.
The couple lives in California, one of nine states that follows community property law, which means that, generally, assets and income acquired by either spouse during the marriage are considered to belong equally to both spouses, regardless of whose name is on the account or who earned the money.
Huang’s Affair Spurs Nvidia Shareholders Lawsuit
Nvidia and Huang have been hit with a shareholder lawsuit accusing the company of misleading investors by failing to reveal the full extent and risks associated with his affair.
In a class action lawsuit filed on Monday in federal court in California, shareholders led by Mark Kistenmacher alleged that Nvidia artificially inflated its share price in potential violation of federal securities law by failing to disclose the affair. After it was revealed when the company announced its investigation on Monday, shareholders suffered “significant losses and damages.”
The filing also alleges that the potential national security implications present “a material risk to the Company’s reputation and business prospects.”
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the lawsuit reads.
Contact Newsweek editors on this story: Tobias Meyjes and Dave Siminoff.
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