Nvidia shares plunge after boss embroiled in alleged Chinese spy scandal

Hundreds of billions of dollars have been wiped off Nvidia’s stock market value as shares plunged after the chipmaker’s board launched an investigation into reports that boss Jensen Huang was the target of a foreign intelligence effort.Nvidia’s stock fell about 8% at one stage in early trading on Wall Street, knocking its value by more than 300 billion US dollars (£222 billion), before settling about 4% down after the firm announced the investigation on Sunday, after an admission by Mr Huang that he had an affair with a business executive.Mr Huang apologised to his wife and to the company in an open letter posted on Nvidia’s website.The New York Times reported that US intelligence determined that the woman, who it named as Alice Huang, a former executive of a Singapore-based data centre company called Megaspeed International, was gathering information for Beijing.China on Monday denied the spying allegations, claiming they were unsubstantiated and a smear campaign against Beijing.It has come as a major blow to Nvidia and tarnished Mr Huang’s tenure as boss of the Silicon Valley tech giant, whose shares hit an all time high last month on its AI successes, making it one of the world’s most valuable publicly traded companies, alongside Apple and Microsoft.Nvidia chips power many of the data centres and systems used to train and run AI models, but its sales of computer chips to China have at times been targeted by US regulators seeking to limit Beijing’s access to such technology.Market experts said the scandal could lead to a further rout in the US tech sector and lead to fears over the AI bubble.Neil Wilson, Saxo UK investor strategist, said: “Nvidia is huge and at the heart of the AI supply chain, so what happens to this stock matters to the rest of the market.“There is the potential for this story to knock sentiment, which is already pretty fragile.”Tech stocks saw big declines at the end of last week, but rallied on Friday in the US.“I don’t think we have found the lows just yet,” said Mr Wilson.He added: “Broadly speaking I think this is a bubble deflating – as it’s been for many, many months, rather than a bursting.”But Amish Patel, head of equity research at Raymond James, added: “Underlying demand for AI computing power remains exceptionally strong, while constraints around power and data-centre capacity are not going away.“That doesn’t mean the risks haven’t increased.“The political debate around data-centre development has become more challenging in the US, while the situation around Nvidia creates additional uncertainty.”