Nvidia loses more than $400 billion in market value as China chip scandal widens

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Nvidia loses $430 billion

Highlights

Nvidia lost about $430 billion in market value over two sessions.
Reports allege that approximately $7.5 billion in Nvidia chips reached China through intermediaries.
Board and government investigations have increased pressure on CEO Jensen Huang.

Nvidia shares ended Tuesday at $168.89, down $9.78, or 5.47%, according to the latest market data. The stock has fallen approximately 9.5% since the controversy emerged, erasing much of the confidence investors had maintained in the AI chipmaker. As Reuters reported, the allegations have prompted an independent board investigation and intensified political pressure on Huang, who has led Nvidia for more than three decades.

Board investigation raises questions over leadership

Nvidia's independent directors have hired outside legal counsel to investigate allegations concerning Huang's relationship with Alice Huang, a Chinese businesswoman accused of having ties to intelligence agencies. The company has maintained that its board has no reason to believe corporate secrets or U.S. national security information were compromised.

The FBI is separately examining whether the Nvidia chief executive was targeted by a foreign intelligence operation. China has rejected the espionage allegations as unfounded, while U.S. lawmakers from both parties have demanded greater scrutiny. Republican Senator Kevin Cramer has called for Huang's resignation, and Senate Democratic Leader Chuck Schumer has urged tighter restrictions on advanced chip exports.

Restricted Nvidia chips reach Chinese buyers

The controversy extends beyond Huang's personal conduct. A report by The Information alleged that Alice Huang and business associates helped arrange at least $7.5 billion in Nvidia chip shipments to China, involving approximately 240,000 processors, including H100, H200, and A100 models. Some reportedly reached Chinese technology companies and AI developers through a network of businesses operating in China and Singapore.

Separate procurement records showed that Northwestern Polytechnical University, a Chinese institution subject to U.S. export restrictions, purchased two Nvidia H200 processors for approximately $123,000 in October. The university also obtained access to additional restricted chips through rented computing services. Other Chinese universities acquired Nvidia processors through domestic suppliers, raising questions about the effectiveness of U.S. export controls and the ability to monitor where advanced AI hardware ultimately ends up.

Governance and export risks threaten Nvidia valuation

The revelations create two significant risks for Nvidia: uncertainty surrounding its longtime chief executive and the possibility of stricter controls on sales to China. Huang has been central to the company's rise as the leading supplier of AI processors, making questions about his leadership particularly sensitive for shareholders.

Three Republican congressional committee chairmen have requested a briefing with Huang on November 18. Lawmakers are also considering stronger chip-tracking requirements and additional oversight of exports, particularly where Chinese military-linked institutions could gain access to advanced computing technology.

For investors, the roughly $430 billion market-value decline illustrates how quickly political and governance concerns can affect even the largest technology companies. Nvidia already faces questions about whether enormous AI infrastructure investments will generate sufficient returns. Further restrictions on Chinese sales, combined with uncertainty over Huang's position, could increase pressure on the stock as the investigation continues.

We also reported Nvidia faces succession scrutiny as Jensen Huang investigation raises governance risk.

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