Nvidia's stock rebounded Wednesday morning, recovering some ground after a sharp selloff, as the company's board investigates CEO Jensen Huang's ties to an alleged Chinese spy and lawmakers on Capitol Hill seize on the controversy to push for stricter AI chip export controls.
Shares were up roughly 3.4% in late morning trading, hovering above $174. That follows a Tuesday close below $169, when the stock hit a six-month intraday low of $165.89. The bounce suggests investors are weighing the potential fallout from the probe against the company's dominant position in the AI chip market.
The board of directors opened an investigation into Huang on Sunday, after The New York Times reported on Oct. 29 that he had a “close relationship” with Alice Huang — no relation — whom U.S. intelligence officials believe to be a Chinese spy. On Tuesday, the board announced it had hired Joon H. Kim, the former acting U.S. attorney for the Southern District of New York, to lead the probe. Kim is tasked with conducting a “thorough and independent investigation” into the matter.
Jensen Huang admitted to an affair in a company memo, Bloomberg reported Sunday, though he did not mention Alice Huang by name. The admission has intensified scrutiny of the CEO’s judgment and raised questions about potential vulnerabilities to foreign intelligence operations.
Lawmakers are now citing the affair as justification for restricting exports of Nvidia’s chips, which power artificial intelligence hardware. In a joint statement Monday, Sens. Jim Banks (R-Ind.) and Elizabeth Warren (D-Mass.) said, “It is time for Congress to take decisive action to pass key bills like the AI Overwatch Act in the NDAA that will cut off pathways through which China accesses advanced chips.”
The push for tighter export controls has gained bipartisan momentum as the scandal roils Congress. House Minority Leader Hakeem Jeffries has also backed stricter curbs, while other lawmakers have pressed for a formal inquiry into Huang’s ties to the alleged spy. The controversy has also sparked shareholder lawsuits accusing the company of concealing the affair.
Meanwhile, Nvidia is set to report third-quarter earnings next Tuesday. The company reported $96.2 billion in revenue for the second quarter of this year, up 106% from the same period a year earlier, underscoring its financial strength despite the current turmoil.
The board’s decision to bring in an outside counsel with deep prosecutorial experience signals that the investigation is being taken seriously. Kim’s mandate includes examining whether Huang’s relationship with Alice Huang posed any national security risks or violated company policies.
The political dimension of the scandal is also intensifying. Senate Majority Leader Chuck Schumer has accused former President Trump of “dereliction of duty” over his handling of the matter, while some Republicans have sought to deflect blame. The partisan divide was evident in a bipartisan push for a probe, though the blame game has split the parties.
For now, investors appear to be betting that Nvidia’s core business will weather the storm. The company’s chips remain essential to AI development, and demand shows no signs of slowing. But the combination of a CEO under investigation, mounting legal challenges, and renewed export control debates could create headwinds in the months ahead.
