Axios

Nvidia investors are rushing to CEO Jensen Huang's defense publicly, while privately expressing disappointment following the executive's admission of an affair with a purported Chinese spy.

Why it matters: Investors appear to be campaigning to prevent Huang from getting ousted from the CEO spot. Nvidia shares are down more than 5% in pre-market trading, but other tech stocks appear to be holding up, meaning the episode doesn't appear poised to trigger a large-scale selloff.

Retail investors were more willing to place bets on individual stocks last month after preferring exchange-traded funds (ETFs) in September, new data from Charles Schwab shared exclusively with Axios shows.

• "I think they were waiting for a pullback in October, and they got it," says Joe Mazzola, head trading strategist at Schwab, referring to retail investors who took advantage of a dip in prices to pour into semiconductor and AI-adjacent companies.

Why it matters: Such optimism among ordinary individual investors is now being put to the test after a rocky start this month.

The fallout from Nvidia CEO Jensen Huang's admitted affair with a suspected Chinese spy could reverberate through the entire AI economy.

Why it matters: The revelations highlight the "key man risk" at Nvidia — the chipmaker's growth and success disproportionately turn on the leather-jacketed superstar who cofounded the company decades ago.

What they're saying: "Nvidia is not an ordinary company, and Jensen is not an ordinary CEO; he IS NVIDIA, clearly sets the long-term strategy and direction," analysts at Bernstein wrote Sunday.

• With Nvidia's flat organizational structure, it's not apparent who could replace him.

The big picture: It's not just Nvidia that stands to be affected. The world's largest semiconductor company is at the heart of the AI economy — interconnected with basically all the major players — and Huang is its leading spokesman and policy advocate.

• Nvidia also serves as the central bank of AI, with more than $530 billion in commitments and guarantees to various suppliers, data center operators and cloud computing firms, per this detailed research from Bethany McLean at Hunterbrook.
• And the $4.5 trillion market-cap company accounts for roughly 7% of the S&P 500 index.

Catch up quick: On Sunday, Nvidia CEO Jensen Huang admitted to having an affair with a suspected Chinese spy, and the company's board announced it was launching an independent investigation.

What to watch: Whether the investigation shakes the board's confidence in the charismatic leader, and what its shares do in trading Monday.

Where it stands: The company's stock fell sharply last week on worries that the midterm election results were a setback for the data center buildout.

• On Friday, Nvidia stock closed at $186.64 — down 6% from a year ago and on track for its worst annual performance since 2022, before the ChatGPT-sparked AI gold rush sent its stock into the stratosphere.
• Its stock is now down 22% from its October peak.

Between the lines: The espionage allegations and Huang's admitted affair are obviously a bad look for the CEO and his company.

• At a minimum, they could hurt politically — giving congressional China hawks ammunition to further curtail trade with the country and provide ammo to a newly elected wave of anti-AI lawmakers.
• Headlines reading "Nvidia's CEO got honeypotted by China" are "going to be a heavy distraction, and at the worst provide significant ammunition to both sides of the aisle," the Bernstein analysts wrote.

Reality check: Nvidia already had an interest in getting the U.S. to let it sell more chips in China — it didn't really need a spy to convince it.

• "This seems superfluous to us," the analysts wrote.

The intrigue: Whispers about Huang's relationship with Alice Huang, a former executive at Singapore data center firm Megaspeed, surfaced back in May.

• Short-seller Culper Research alleged that Nvidia chips were getting to Chinese customers through Megaspeed, claiming it was financed by Alibaba.

Yes, but: Culper's claims are not proven, and it's not clear if any sensitive information was compromised.

The other side: Nvidia's board said it has no reason to believe national security or company secrets were compromised and expressed confidence in Huang's leadership, Axios' Madison Mills reported.

Flashback: At a company event in January, Huang was asked how he was able to stay atop the company for so long.

• "The secret for being CEO for this long is, one: Don't get fired," he replied, Bloomberg reported.

Shares in Nvidia slumped early Monday morning after CEO Jensen Huang admitted an affair and the company's board launched a probe into that relationship with a suspected Chinese spy.

Why it matters: The global AI economy revolves around a few companies, Nvidia most prominent among them.

Former Google CEO Eric Schmidt remains staunchly bullish on an industry facing rising social pushback, saying data centers can occupy America's "empty spaces" and predicting a near-term revolution in AI-assisted research.

Why it matters: In a wide-ranging interview following his appointment to lead Caltech's board of trustees, Schmidt acknowledged the industry does a "terrible" job marketing itself to voters.

• Yet, looking from his new perch at what he calls the "crown jewel of nerddom," he sees an unstoppable wave of AI-augmented scientists poised to dominate the future workforce.

Nvidia CEO Jensen Huang admitted to having a romantic relationship with a suspected Chinese spy in a message to his company Sunday, seen by Axios.

Why it matters: In the email, Huang apologizes to his wife and family and says he will support and cooperate in an investigation from Nvidia's board of directors.

No state looms larger, more dominant or more instructive about the future of American politics, governance and AI than Texas.

Why it matters: Texas is suddenly — and unexpectedly — the American story. It's the battleground and proving ground for immigration policy, AI, data center growth, Hispanic voting patterns, and the direction of the Democratic Party.

Put simply, it seems nearly impossible for Republicans to retain the presidency in 2028 without the Lone Star State. And it seems nearly impossible for AI to keep growing so fast if Texas rejects or dramatically slows it.

Nvidia CEO Jensen Huang is facing increasing congressional scrutiny after multiple reports Friday night suggested he had a romantic relationship with a purported Chinese spy.

Why it matters: Huang is arguably the world's most powerful CEO, the man who runs one of the world's largest companies and whose products are central to the world's most important technology.

Just as public markets are growing increasingly skeptical over the AI trade, private investors are reportedly reconsidering Anthropic's mind-blowingly high $2 trillion valuation.

Why it matters: What a year this week has been.

Congressional Democrats see a target-rich environment next year. But they're also worried that if they investigate everything, they may appear to investigate nothing.

Why it matters: Democrats want to move beyond the one-off hearings, fist-pounding document demands and subpoena threats that defined much of their oversight during President Trump's first term.