Nvidia stock NVDA fell 6.4% on Tuesday, extending its recent decline as reports about alleged shipments of restricted AI processors to China and an FBI investigation involving CEO Jensen Huang weighed on sentiment.
The Information reported that Nvidia chips worth $7.5 billion were delivered to Chinese companies through a network allegedly linked to Alice Huang, an executive suspected by US officials of working with Chinese intelligence.
Alice Huang, who is not related to the Nvidia chief, previously held a senior position at Singapore-based Megaspeed International.
The reports have placed additional scrutiny on Jensen Huang, who has faced questions about his relationship with Alice Huang.
Nvidia’s board has launched an independent investigation, although the CEO remains in his position.
How Nvidia chips were allegedly routed to China
According to The Information, Alice Huang worked with her husband and sister to establish a network of companies in China and Singapore to facilitate shipments of Nvidia processors.
One of the companies, Shanghai Century Litong, received preferred cloud partner status from Nvidia in 2023.
The designation reportedly provided priority access to limited supplies of advanced chips.
The company was also linked to Megaspeed, where Alice Huang served as an executive.
The network allegedly moved around 240,000 processors, including restricted models such as the H100, H200 and A100, into China.
Some of the computing capacity was reportedly used by major Chinese technology companies, including Alibaba and Tencent.
The reported arrangement involved shipping chips to data centres in countries such as Malaysia and Indonesia.
Computing capacity was then leased online to customers in China, allowing the hardware to remain outside the country’s borders while serving Chinese users.
The US introduced restrictions on exports of advanced Nvidia AI processors to China in 2022, citing concerns about the country’s technological and military capabilities.
The Trump administration later permitted limited sales of the H200 to approved Chinese buyers under licensing arrangements.
Trump says FBI is investigating Jensen Huang
President Donald Trump said on Monday that the FBI was examining the matter.
He also said Huang had told him that he had no idea Alice Huang was a suspected spy.
Trump said he believed the Nvidia CEO, adding that Huang would “be in good shape”.
The president also indicated he might include the executive on an upcoming trip to China, although that remains uncertain.
Beijing has rejected the allegations as groundless.
Megaspeed, meanwhile, said in a LinkedIn statement that investigations by US authorities and others had found “no evidence of any violations concerning the illicit transfer of chips or any illegal activities”.
Nvidia’s board has opened an independent investigation.
It has said it has no reason to believe that company secrets or national security were compromised.
Cathie Wood buys Nvidia shares as analysts assess risks
Despite the pressure on the stock, some investors appear willing to buy the dip.
ARK Invest CEO and chief investment officer Cathie Wood purchased 90,443 Nvidia shares across her firm’s exchange-traded funds, according to a Monday trading disclosure.
Based on Nvidia’s Monday closing price, the purchases were worth slightly more than $16 million, assuming the transactions took place that day.
Wall Street analysts have so far shown limited reaction to the latest disclosures, with the average price target at around $332, according to FactSet.
Citi analyst Atif Malik, however, cut his price target to $285 from $315, citing lower valuations across chip stocks and the investigation involving Nvidia’s CEO.
Malik said, “long-term leadership stability risk is among key investor concerns”.
APAC Research upgraded Nvidia to Buy, describing the investigation as more of a public-relations and damage-control exercise than evidence that Huang had been compromised.
The research firm said it would be surprised if the stock did not rebound, while acknowledging the uncertainty surrounding the situation.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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