New York: Nvidia, the maker of the world’s most powerful artificial intelligence chips, is facing a serious crisis after reports raised allegations about CEO Jensen Huang’s links to China, unsettling shareholders. Nearly $470 billion has been erased from the company’s market value over just two trading sessions.
On November 10, Nvidia shares fell 5.53 per cent to close at $168.79 on the Nasdaq, taking its market capitalisation down to $4.07 trillion.
The sell-off was driven by reports about Huang’s personal and business associations. According to the reports, he is linked to Alice Huang, a prominent Singapore-based businesswoman who is alleged to be acting on behalf of Chinese intelligence. The claims have caused a stir internationally. Separate reports that Nvidia’s high-value AI chips are being illegally routed to Chinese companies despite a US ban have also caused unease within the American government.
Nvidia’s board of directors has responded by appointing an independent investigative committee to conduct a comprehensive inquiry into the allegations against the CEO and the alleged diversion of chips. US lawmakers have also sought a direct explanation from Huang. Nvidia’s management has said that neither the company’s trade secrets nor US national security has been put at risk.
The share price decline has also reshuffled global market rankings. With Nvidia losing ground, Microsoft has regained its position as the world’s second most valuable company.
Investors are also questioning the scale of spending on artificial intelligence, with analysts assessing whether returns are keeping pace with the massive investments. Nvidia’s quarterly results, due on November 17, are expected to play a key role in shaping the company’s outlook and in showing the real level of demand for AI chips.