Huang affair: “Jensen is irreplaceable”: Nvidia shares fall due to espionage scandal

Frankfurt. The scandal surrounding Nvidia CEO Jensen Huang's affair is also affecting the stock. The stock lost around five percent in pre-market trading. Analysts assume that the investigation into the scandal could weigh on the shares for a while.

Huang admitted to having an affair with a suspected Chinese agent on Sunday evening after initially denying it. The currently most important manufacturer of chips for the AI ​​boom is now starting an investigation. Huang is also scheduled to testify before Congress next week, immediately after the publication of the quarterly figures.

The highly profitable company is at the center of the artificial intelligence boom and has many, deep connections with other tech companies. So far, the scandal has not had a negative impact on tech stocks, which were recently volatile after the US midterm elections. Futures on the technology-heavy Nasdaq were up on Monday morning. But the situation is tense. The group's success is closely tied to its CEO and co-founder - and market observers are raising the question of whether this risk has been priced in enough.

Nvidia is the most successful chip company in the world and has used the high profits of recent years to finance a number of other companies. They in turn buy Nvidia chips and fuel the company's success. Capital market expert Mohamed El-Erian, professor at the renowned Wharton Business School in Philadelphia, sees Nvidia as “a systemic risk that extends far beyond the tech industry into the broader financial markets and the economy as a whole,” as he told Handelsblatt.

Jensen Huang has now become a risk himself with his affair. El-Erian speaks of the so-called “key person risk”, which is now in the foreground. This is about the extreme dependence on a single key person for the success of the company and the share. He says: “One may doubt whether the markets have adequately priced in this risk.”

Nvidia shares have been one of the biggest stock market stars for a long time. With a market value of $4.5 trillion, it is the second most valuable company behind Apple. Nvidia was at the top here for a long time.

This year, however, the performance was mixed. After the surprisingly strong sell-off last week, the stock has given up its gains since the beginning of the year. Since its high in October, the paper has lost 22 percent of its value.

Huang's admission comes "at a time when investors are already questioning the valuations and pace of AI spending," eToro's Gilbert said. “Any doubt about his position will be significant for shareholders.”

The board of directors has backed Huang, but the investigations are still pending. “Until there is more clarity, investors must consider that the results raise further questions.”

There is currently intense discussion on Wall Street about whether the Nvidia boss should resign. Finally, the affair also has implications for geopolitics and national security. US President Donald Trump, who is said to have a close relationship with Huang, made his decision on Sunday: the Nvidia boss should remain in office.

Gary Black, analyst at financial advisor The Future Fund, sees it differently. “I doubt Jensen Huang can remain CEO of Nvidia,” he clarified on X. “Although Huang has not committed a criminal offense or civil wrongdoing, his code of conduct and judgment will be called into question – which will likely result in his removal by the board.”

In the long term, Black assumes that Nvidia will be successful even without Huang. In the short term, however, he expects price losses. Huang “does not have an obvious successor in-house,” he said. “Many portfolio managers are likely to reduce their Nvidia positions in the coming weeks as there is uncertainty about a possible successor at the top of the group.”

Stephan Kemper, head of investment at BNP Paribas Wealth Management, believes the damage to the tech industry as a whole is limited. The Nvidia board of directors emphasized that there was no evidence of a leak of trade secrets or a threat to national security.

Trump's statements would also calm the situation. “How strong the fundamental demand in the supply chain continues to be assessed was shown by the reaction in Asia on Monday morning, where domestic institutional investors took advantage of the setback to enter the market,” said Kemper. At the important chip production location Taiwan, the Taiex rose by around six percent, supported, among other things, by reports of new Nvidia orders for TSMC. Japan's Nikkei gained 3.1 percent. The South Korean leading index Kospi and the chip stocks Samsung and SK Hynix, on the other hand, lost significantly.