A Nvidia shareholder lawsuit filed in federal court in California accuses the chipmaker and its chief executive, Jensen Huang, of misleading investors about Huang’s affair with a woman that US authorities have concluded was a Chinese intelligence asset. The complaint, lodged on Monday in San Jose, landed on the same day President Donald Trump said the FBI was examining the matter and Nvidia shares dropped 4.3%, cutting about $190bn from the company’s market capitalisation.
The case centres on Huang’s alleged relationship with Alice Huang, a former executive at Singapore-based data centre company Megaspeed. She is not related to the Nvidia chief executive. The New York Times reported the alleged relationship last month and said US authorities had concluded Alice Huang was a Chinese intelligence asset.
Nvidia shareholder lawsuit filed minutes after the closing bell
According to the Guardian, the complaint alleges that Nvidia and Huang misled shareholders in connection with the executive’s alleged affair, and that neither disclosed that the matter raised national security concerns threatening the $4.3tn (£3.2tn) company’s reputation and business prospects.
The Nvidia shareholder lawsuit is a proposed class-action lawsuit — the term for a legal action in which a person or small group sues an entity on behalf of a larger group. The shareholders are led by Mark Kistenmacher, described by the Guardian as a retail investor, and are seeking unspecified damages from the defendants. The Financial Express, citing Reuters, reported that the complaint was filed on Monday in a federal court in San Jose, California, and that the filing came five minutes after the US stock market closed.
Several US law firms have announced investigations into whether Nvidia misled investors and have asked shareholders to get in touch. The Guardian noted that it is common for shareholders to sue companies after unexpected share price declines.
The New York Times statement at the heart of the complaint
Nvidia described its executive’s interaction with Alice Huang as “not unusual or unexpected” in a comment submitted to the New York Times last month, adding that “meetings with customers are part of a CEO’s job; Jensen talks with thousands of customer executives every year”.
The lawsuit claims that statement was “materially false and misleading at the time it was made because Jensen Huang had an affair with Alice Huang.”
On Sunday, Huang admitted he had been “unfaithful” to his wife, without identifying the person involved in the affair. In a message to Nvidia employees, he said: “I was unfaithful to my wife.” He did not share further details about the alleged relationship.
Megaspeed, export controls and counted GPUs
The complaint also accuses the company of making false and misleading statements about its relationship with Megaspeed, which has reportedly been investigated over suspicions that it may have been diverting Nvidia chips to China in contravention of US export restrictions.
In an interview published on 30 October, Huang said: “we’ve studied all their [Megaspeed] deployments of our GPUs and counted every one”. He added: “And I think the US government also has as well.”
In a statement last year, Megaspeed said it had acted “fully in compliance with all applicable laws, including US export control regulations”. Nvidia and Megaspeed did not immediately respond to a request for comment on the lawsuit, the Guardian reported. Scrutiny of how Nvidia’s hardware moves through third countries has intensified in recent months, including over H200 export approvals tied to an empty office.
Independent directors hire outside legal advisers
Nvidia announced on Sunday that it was conducting an independent investigation into reports that Huang was the “target of a foreign intelligence effort”. The Financial Express reported that independent directors have hired outside legal advisers to examine the circumstances surrounding the alleged relationship, and that Nvidia has maintained there is no evidence that national security or the company’s confidential business information was compromised.
Huang said in an open letter posted on Nvidia’s website: “I support the investigation and will cooperate fully. I love our country and our company. I am committed to protecting Nvidia and supporting America’s national security.”
Trump confirms an FBI inquiry
Trump said on Monday that the FBI is investigating Huang’s affair, but said he did not think the executive had a reason to worry.
“I know the FBI is looking into it in terms of something else, and I think that he’ll be in good shape,” Trump said at a White House briefing.
“I did speak to him today just to see if he’s feeling all right, how you’re doing,” Trump said. “He said he had absolutely no idea that the person in question was a spy.”
Lawmakers press Commerce Secretary Howard Lutnick
As the Financial Express reported, the controversy has brought fresh attention to concerns in Washington over the sale of advanced artificial intelligence chips and the possibility of restricted technology reaching China through third countries. Democratic members of the House Foreign Affairs Committee have sought answers from Commerce Secretary Howard Lutnick about the administration’s policies on technology exports, while Republican lawmakers have sought a closed-door discussion with Huang.
Huang co-founded Nvidia in 1993 and has led the Santa Clara, California-based company as it grew into the world’s most valuable chipmaker, making him one of the most recognised figures of the artificial intelligence boom. He has also been outspoken about Washington’s export rules, telling audiences that Nvidia’s market share in China has fallen to zero percent.
The Financial Express reported that the legal case and the board’s ongoing investigation could keep Nvidia under scrutiny over its disclosures to investors and the security risks surrounding its technology exports. Monday’s 4.3% decline in Nvidia market value amounted to roughly $190 billion, according to Reuters figures cited in the report, and the Nvidia shareholder lawsuit now leaves the company facing questions over the alleged relationship, whether it posed any security concerns, and whether shareholders were properly informed.
