China’s Foreign Ministry calls the spying allegations a smear campaign
Nvidia shares were down 5% in premarket trading Monday after the company announced Sunday that it was investigating reports that CEO Jensen Huang was the “target of a foreign intelligence effort.”
During a routine briefing Monday, China’s Foreign Ministry dismissed the spying allegations, calling them “a smear campaign against Beijing.”
Dan Ives, partner and senior managing director at Yorkville Ives & Co., said in an analyst note that there was a small chance Huang could be removed or step down from the CEO post. He also said Huang could be removed as CEO depending on the board’s investigation and described the risk as an overhang on shares in the near term.
Nvidia shares had reached an all-time high of $243.37 last month before Monday’s premarket decline.
Nvidia’s Sunday announcement followed Huang’s acknowledgment that he had been intimate with a business executive. According to The New York Times, U.S. intelligence determined that the executive was gathering information for China.
Nvidia is a central player in the race to develop artificial intelligence. Its chips power many of the data centers and computing systems used to train and run AI models.
The company’s advanced processors have also been a focus of U.S. export restrictions aimed at limiting China’s access to cutting-edge semiconductor technology.
“Jensen is the core DNA of Nvidia and its AI success and ambitions are heavily tied to him staying on as CEO,” Ives wrote.
Ives also wrote that Huang was not replaceable and that no other person on the management team could step in seamlessly as CEO. He said investors would factor that dynamic into the stock.