Nvidia’s stock price sank Monday, after the company announced it would open an investigation into its CEO Jensen Huang’s relationship with a business executive who U.S. intelligence determined was a Chinese spy.

Shares of Nvidia dropped more than 6% when trading opened. The broader market still rose, with the S&P 500 and the tech-heavy Nasdaq composite index both more than 1% higher to start the trading day.

Nvidia’s board has said it has no reason to believe national security or the company’s own trade secrets have been compromised, but the chipmaker’s sheer size and significance to the artificial intelligence trade means the news will reverberate across Wall Street.

Nvidia and Huang initially said there was nothing problematic or unusual about his relationship with Alice Huang, who became a U.S. government concern after surveillance revealed that she was feeding information directly to Beijing. Alice Huang is a top executive at a Singapore-based data center company that had become one of Nvidia’s biggest customers in Southeast Asia.

Investors were already reeling from a sharp sell-off in many of the tech companies that have driven the development of AI, like Nvidia. Those fears picked up again last week as the initial relief rally following the midterm election results turned to a sharp sell-off, with investors anticipating that state and local governments controlled by Democrats could lead to a slowdown in AI infrastructure projects.

Nvidia’s stock fell nearly 9% last week and is more than 21% below its peak at the start of October, a decline that erased some $1 trillion in market value. The sharp fall put the company in a bear market, defined as a drop of 20% or more from a recent high.

“We believe demand for the company’s products seems unlikely to be affected, but it seems plausible to postulate increased risks” for the AI industry’s momentum, analysts from Bernstein wrote in a note Monday, “as AI build-outs become an increasingly political issue.” The scandal engulfing Huang also highlighted what’s known as “key man risk” for Nvidia, the analysts added, given how tightly associated he is with the company he co-founded more than 30 years ago. “Nvidia is not an ordinary company and Jensen is not an ordinary CEO,” they wrote.

Nvidia became the world’s largest public company, by market value, for the first time in 2024, exerting an outsize influence over major indexes such as the S&P 500. The rapid run-up in Nvidia’s share price put it at the forefront of an exclusive club of tech giants known as the “Magnificent Seven,” which now dominate the stock market.

It was the first company to hit $4 trillion and then $5 trillion in value, as it rode the AI boom to dizzying heights. Analysts expect the company to make a profit of well over $200 billion this year, with its chips in high demand as tech companies rush to build giant AI data centers.

But as investors have recently turned more wary of sky-high AI valuations and the seemingly circular investments of the industry’s largest players, Nvidia’s stock has stumbled. During last week’s market turmoil, Nvidia fell below Apple as the world’s biggest company.

The company’s shares are now roughly flat for the year, although remain significantly higher over longer time periods. Analysts remain bullish, with more than 90% of those who cover the stock rating it a “buy,” according to a compilation by FactSet, with an average price target nearly 80% higher than where it closed trading Friday.

“This is a black eye moment for Jensen and will spark multiple congressional inquiries at a minimum,” Dan Ives, the senior managing director at Yorkville Ives, wrote in a research note Sunday. The analyst, who is known for being consistently upbeat about tech stocks, warned that the revelations would “create an overhang on the stock.”

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This article originally appeared in The New York Times.

By Joe Rennison and Jason Karaian
c. 2026 The New York Times Company