Nvidia, the world's second most valuable company, saw its shares tumble by about 6% on Monday, wiping roughly $250 billion off its market value, after the company announced an independent investigation into CEO Jensen Huang's extramarital affair with a woman suspected of being a Chinese spy.

Investigation Launched

The probe follows reports that US intelligence officials believe Alice Huang, also known as Huang Le, was a spy for Beijing. According to a New York Times report, Secretary of State Marco Rubio sent a memo to top Washington officials last spring warning that the Nvidia boss was in a close relationship with a Chinese spy. Alice Huang was managing director of Singaporean company Megaspeed, which has had dealings with Nvidia.

Nvidia's board of directors said in a statement that it would begin an investigation "in light of recent reporting that founder and chief executive Jensen Huang has been the target of a foreign intelligence effort." The board added that it had no reason to believe the company's secrets or national security were compromised.

China has rejected the allegations, with its Foreign Ministry calling them "entirely groundless, speculative and intended to smear and malign China."

Huang's Admission

Jensen Huang admitted he was "unfaithful" to his wife and apologized for hurting her and their children. He added that he was "committed to protecting Nvidia and supporting America's national security" and would cooperate with the investigation.

The news sparked a sell-off in Nvidia's shares, but the broader US stock market opened positively on Monday after last week's turmoil, with rival chipmakers benefiting. Analysts suggested the hit to the company would be short-lived. Victoria Fernandez, chief market strategist at Crossmark Global Investments, told the BBC that investors would not abandon Nvidia because the chipmaker is so central to the AI industry.

"Nvidia is the core of this AI trade, and without them, all these other pieces start to fall apart because the financing's not there," she said.

Support from Tech Leaders

After the investigation was announced, other big tech bosses, including Elon Musk, came out in support of Huang continuing to lead the firm. US President Donald Trump described the Nvidia boss as an "honourable guy."

Huang co-founded Nvidia with two other engineers in 1993. Its chips were initially designed for gaming, but Huang decided to turn its focus on AI development, turning it into the world's second most valuable company.

Uncertain Future

A key concern for investors going forward is what would happen to Nvidia if Huang was removed from the company. Fernandez said there was "no natural successor" to the chief executive.

Huang, unlike other founders in the tech industry, is vulnerable to any move by Nvidia's board of directors to oust him. He owns only around 3.5% of the company, and Nvidia operates on a single class voting structure, meaning his stake would not be enough to act as a veto power over any board decision. By contrast, many tech founders who lead their companies, including Mark Zuckerberg of Meta and Musk of Tesla and SpaceX, hold significant percentages of multiple types of stock in their companies.

Fernandez said she does not believe the board will remove Huang as chief executive, unless there is glaring evidence of wrongdoing related to national security or intellectual property, "but I bet they start bringing someone up as his number two, to have there for the future."

The modest fall in its shares mean investors believe it is unlikely he will step down or be removed as chief executive, but that the outcome of the investigation will be closely watched.

Even people who do not directly own shares in Nvidia can be affected by rises and falls in its value. Pensions or savings invested in pots which have stakes in the company through index tracking funds can be impacted, for example.

Nvidia chips have been a major focus of the AI race between the US and China and the White House has previously imposed controls on where its advanced products can be sold. The H200, Nvidia's second most advanced semiconductor, had previously been restricted by Washington over concerns that it would give China's technology industry an edge over the US. But Huang has been against restricting the sale of Nvidia's chips to China, arguing that it would be better for the global rollout of AI to be powered by US technology. In January, the Trump administration said it would allow the company to sell its H200 chips to Chinese customers under certain conditions.