Summary

  • Nvidia shares fell 4.29% in overnight trading and are now about 22% below their October peak.
  • Nvidia's board has launched an independent investigation related to the controversy surrounding CEO Huang, and said there were no signs that national security or company secrets had been compromised.
  • With Nvidia's quarterly earnings release scheduled for Nov. 17, the internal investigation has increased leadership uncertainty, and analysts said the core business remains solid but issues surrounding Huang could weigh on the stock.

Forecast Trend Report by Period

Nvidia shares fell more than 4% in overnight trading after Chief Executive Officer Jensen Huang acknowledged in an internal memo to employees over the weekend that he had been unfaithful to his wife and apologized.

As of 1:09 a.m. Eastern time on Nov. 9, Nvidia was trading at $178.64 on Blue Ocean, an alternative trading system. That was 4.29% below the previous close.

The controversy involves an alleged affair with a person suspected of Chinese espionage activity. Foreign media reports said Alice Huang, a former executive at MegaSpeed International, had been classified by US intelligence agencies as a person suspected of Chinese spy activity. She was identified as having targeted Huang.

Nvidia's board said it would launch an independent investigation to determine whether Huang had been targeted by a foreign intelligence agency. The board added that it had "no reason to believe" national security or company confidential information had been compromised.

President Donald Trump called Huang "a great man." He also said Huang should remain at the helm of the chipmaker.

Nvidia shares are down about 22% from their October peak. The company is scheduled to report quarterly earnings on Nov. 17.

The start of an internal investigation just days before the earnings release has increased uncertainty over the company's leadership. Analysts expect Nvidia's core business to remain solid. Still, they warned the stock could come under pressure if issues surrounding Huang become a distraction.

Minseung Kang