Nvidia Loses $470 Billion as CEO Scandal Deepens Market Jitters

Nvidia shares continued their downward trajectory on Tuesday, marking a significant two day decline that wiped out more than 470 billion dollars in market value. The steep drop has intensified scrutiny of the chip giant as investors react to growing concerns regarding the fallout from a personal scandal involving Chief Executive Officer Jensen Huang.

The turmoil stems from allegations that Huang had an affair with a Chinese businesswoman, Alice Huang, who is reportedly not related to the CEO. According to a report by The Information, this relationship allegedly helped facilitate the shipment of at least 7.5 billion dollars worth of Nvidia chips to Chinese firms. The report, which cited two sources familiar with the woman, suggests that the connection provided a strategic advantage in navigating complex supply chains.

In response to the mounting pressure, Nvidia’s board of directors initiated an internal investigation on Sunday. On Tuesday, the company’s independent directors announced that they had retained former acting US Attorney Joon Kim and the law firm Wachtell, Lipton, Rosen & Katz to lead the inquiry. Meanwhile, the Federal Bureau of Investigation is separately examining whether the 63 year old executive was targeted by a foreign intelligence operation. Huang has informed employees that he was unfaithful to his wife but has not provided specific details about the nature of the relationship.

The stock price fell by more than 6 percent on Tuesday, following a 4.3 percent drop on Monday. This decline briefly allowed Microsoft to surpass Nvidia as the world’s second most valuable company, a position the AI bellwether had held since June 2025. The broader sell off has erased a total of 1.8 trillion dollars, or 32 percent, of Nvidia’s share price over a 24 trading day period that began before the current scandal broke.

Nvidia had reached a record high closing price of approximately 243 dollars per share in early October 2026, which corresponded to a market capitalization of 5.78 trillion dollars. The stock subsequently experienced a gradual pullback of about 20 percent due to general market dynamics. However, the emergence of the so called honeypot scandal accelerated the decline, leading to the recent sharp losses.

The allegations have heightened investor unease regarding Nvidia’s governance, compliance with export controls, and its heavy reliance on Huang’s leadership. These concerns are compounded by broader questions about whether massive expenditures on artificial intelligence infrastructure will yield adequate returns. Bank of America analysts noted in a recent report that the key investment debate is whether the situation remains specific to Nvidia or if it triggers wider disruptions across the AI infrastructure sector. They cautioned that allegations should not be equated with proven business damage.

The Information reported that Alice Huang, also known as Huang Le, built a network of companies with her husband and sister across China and Singapore to acquire Nvidia chips. Central to this network was Shanghai Century Litong, a China based company that secured preferred cloud partner status with Nvidia in 2023. This status granted it priority access to the company’s hardware. When orders for chips subject to US export restrictions stalled, Alice Huang reportedly used her ties to Nvidia and its distributors to secure supplies, helping move approximately 240,000 H100, H200, and some A100 chips into China.

These chips were used to rent computing capacity and operate data centers, including some models that were barred from sale to China. The report stated that some of the chips ultimately served major tech firms such as Alibaba and Tencent, as well as smaller Chinese AI labs. Alice Huang also held an executive position at Megaspeed, a Singapore registered company linked to Century Litong that has been investigated by US authorities over chip shipments from Southeast Asia to China.

The report further indicated that Alice Huang leveraged her relationship with Jensen Huang to bolster her credibility while keeping her role vague and avoiding a detailed paper trail. Nvidia did not immediately respond to a request for comment from Reuters. Alibaba, Tencent, Megaspeed, and Shanghai Century Litong were not immediately available for comment outside of regular business hours. Reuters noted that it could not independently verify the specific details of the report.