Nvidia Stock Fans Just Got Bad News From China

This article first appeared on GuruFocus.

Nvidia (NASDAQ:NVDA) has opened an independent board investigation into reports that Chief Executive Jensen Huang was targeted in an alleged foreign intelligence operation, bringing scrutiny to the chipmaker’s internal security and business relationships.

A committee of independent directors will supervise the review with assistance from external legal advisers. The board said it had found no evidence that Nvidia’s confidential information or national security interests had been compromised. Huang has agreed to cooperate with the inquiry.

The investigation follows reports by The New York Times linking Alice Huang, a Singapore-based business executive, to an alleged Chinese intelligence operation. U.S. officials reportedly suspected she was transmitting information to Beijing. The newspaper also reported that her company, Megaspeed, purchased more than $4.8 billion worth of Nvidia chips over two years.

The reports have also raised questions about Nvidia’s chip sales to customers potentially involved in moving restricted AI processors into China. Huang apologized to employees over his personal relationship with Alice Huang, according to the newspaper, but is expected to remain chief executive while the board examines the allegations. Directors have not provided a completion date.