Raymond James says Nvidia spy allegations could prompt tighter China chip controls

Jensen Huang won Trump’s approval for H200 sales to China in January

In a Sunday note, analysts at Raymond James wrote, “The high-profile nature of these allegations could make it increasingly difficult for Washington to avoid a response.” The analysts said the espionage reports would likely bolster congressional support for legislation aimed at further restricting semiconductor and chipmaking-equipment sales to China, which could in turn renew strain in trade between the two countries.

Nvidia’s China sales are already shaped by government limits. Huang has lobbied Washington in recent years to loosen limits on Nvidia chip sales to China, winning Trump’s approval for selling the company’s H200 chips in January. The H200 is not among Nvidia’s most cutting-edge chips but remains powerful. Nvidia has said in regulatory filings that it sold only a small amount to China, and Chinese government restrictions also limit those sales.

The California-based company is among the world’s most valuable and has become a leader in making chips that power AI. Its high-end chips have emerged as leading building blocks for the technology, and Huang has become a key public figure in the industry’s race to develop it.

On Sunday, Nvidia announced that its board was initiating an independent investigation. The company cited recent reporting about Huang being “the target of a foreign intelligence effort.” The board said it had “no reason to believe” that either national security or Nvidia secrets were compromised, but said the inquiry would examine all available information. Nvidia added that Huang would remain CEO and had committed to cooperating fully.

Company spokesperson John Rizzo said in a statement, “Today’s news will not slow Nvidia.” He added, “Jensen is committed to continuing to lead Nvidia as CEO without interruption.”

Huang acknowledged an extramarital affair in a separate email to Nvidia employees that the company later published. He said reports about the relationship and potential national security concerns had led the board to investigate. Huang and Nvidia did not name the woman he had been intimate with, but The New York Times identified her as business executive and Chinese citizen Alice Huang. The outlet said U.S. intelligence determined she was gathering information for Beijing.

In the email, Huang wrote, “I was unfaithful to my wife. My actions hurt her and our children,” adding that he was “deeply sorry” and that his colleagues also “deserve better” from him. Huang reiterated his support for the board’s inquiry, writing, “I love our country and our company. I am committed to protecting NVIDIA and supporting America’s national security,” he said Sunday.

Huang, 63, founded Nvidia more than three decades ago. He and his wife, Lori, reportedly have two children who both work at Nvidia.

China denied that it engaged in an attempt to ensnare Nvidia’s CEO. During a routine briefing Monday, Foreign Ministry spokesperson Guo Jiakun said, “The so-called Chinese spy allegation is unsubstantiated. It is nothing but smears against China.”

The New York Times reported that Alice Huang was a former executive of Megaspeed International, a Singapore-based data center company whose website prominently touts its partnership with Nvidia. Last year, Megaspeed faced claims that it was illicitly shipping advanced Nvidia computer chips into China. In December, the company maintained there was “no evidence” of those claims. Megaspeed bought more than $4.8 billion worth of Nvidia chips over the past two years, according to The New York Times.

Last month, The New York Times reported that U.S. intelligence agencies had discovered that Jensen Huang had developed a close relationship with Alice Huang and determined she was feeding information directly to Beijing.

Huang has maintained a close relationship with President Donald Trump throughout the Republican president’s second term in office. Huang is among the technology executives who have dined at the White House, and he has traveled on Air Force One. Trump has called Huang “smart” and “amazing” and has repeatedly insisted that Huang accompany him on foreign trips.

After news of Nvidia’s investigation broke, Trump said Sunday that the two had not spoken but that he hoped “everything’s fine.” When asked whether he wished he had acted on intelligence he was briefed about spying, Trump continued to praise Huang. “I think he’s an honorable guy. I think he probably has an excuse for it. He’s done an amazing job for our country,” Trump told reporters. He added that he was still open to taking Huang on his trip to Asia next week.

Shares of Nvidia sank nearly 5% as of midday Monday. Stocks for other AI-related companies, including Advanced Micro Devices and Coreweave, meanwhile climbed higher. Nvidia’s investigation remains ongoing, and many questions remain unanswered.