Nvidia and Jensen Huang Hit With Shareholder Class Action Over Spy Affair as Schumer Targets Trump's Briefing

Two new fronts opened against Nvidia and its CEO since Huang admitted the affair on Sunday, Nov. 8. A shareholder sued the company in federal court, and the Senate's top Democrat went after the president over what he knew and when.

The shareholder lawsuit

Mark Kistenmacher, a shareholder represented by the Rosen Law Firm, filed a proposed class action in San Jose, California, on Monday, Nov. 9, shortly after the market closed. It names Nvidia and Huang.

The complaint alleges Huang did not disclose his relationship with Alice Huang, a former top executive at Singapore-based data center company Megaspeed. She is not related to him. Megaspeed is a major buyer of Nvidia chips.

The suit claims the company's misleading statements "artificially inflated" Nvidia's share price. It says plaintiffs and other class members "have suffered significant losses and damages" because of "the precipitous decline in the market value of the Company's securities."

Those are allegations. No court has ruled on them, and no class has been certified. Nvidia shares ended Monday down 4.3%.

Huang's own earlier words are likely to matter in the case. Last month he told Bloomberg that his relationship with Alice Huang was "related to Megaspeed, and it was all completely normal and not unusual."

What Nvidia and Huang have said

In a memo posted on Nvidia's website, Huang wrote: "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry." The memo did not name Alice Huang or address her alleged ties to Beijing.

Nvidia's board said Huang may have been the "target of a foreign intelligence effort." It also said it has "no reason to believe that either national security or Nvidia secrets were compromised." The board opened its own independent investigation, and it said Huang supports the review and will cooperate.

Huang, 63, stays on as CEO during the probe. Spokesperson John Rizzo said, "Today's news will not slow Nvidia."

The intelligence allegations

The core allegations come from The New York Times and the Financial Times. The Times reported that U.S. intelligence agencies concluded Alice Huang was feeding information to Beijing. Both outlets reported that U.S. intelligence believes China's Ministry of State Security recruited her.

The Times also reported that surveillance of her showed regular contact with an American citizen later identified as Jensen Huang. It reported that she wanted him to lobby the Trump administration to loosen chip export controls, and that he did so. Huang has not addressed that claim in his public statements. It is also unclear what information, if any, Alice Huang passed to China.

China has denied that she works for its government. It called the accusations a "smear campaign."

Megaspeed bought more than $4.8 billion of Nvidia chips over two years, according to the Times. U.S. authorities have also investigated allegations that Megaspeed helped China obtain advanced AI processors covered by U.S. export restrictions.

Schumer goes after Trump

On the Senate floor Tuesday, Nov. 10, Schumer cited the Times's reporting that Trump was briefed roughly a year ago on Huang's relationship with the woman and on intelligence that she was passing information to Beijing. The Times also reported that Secretary of State Marco Rubio helped draft a classified memo this spring warning the administration about the relationship.

"What a dereliction of duty," Schumer said.

He pointed to Huang's trip to Beijing with Trump and to Nvidia's reported $25 million pledge toward the planned White House ballroom. Schumer asked that Congress get a full account of the administration's response. He also urged legislation to tighten restrictions on advanced AI chip exports to China.

Trump has defended Huang. At a surprise press briefing Monday, he said he asked Huang directly whether he knew the woman was a spy. "He said, 'I had no idea that she was a spy,' and I really, and I really believe him," Trump said.

Trump added that "the FBI is looking into it in terms of something else, and I think that he'll be in good shape." He also said: "I hope there's no problem. If there is a problem, we'll let you know about it."

The FBI has not publicly detailed what it is examining. Trump did not say what "something else" refers to.

What is still open

No charges have been filed against Huang or Nvidia. The sources show no public finding on what Huang knew about Alice Huang's alleged intelligence ties, or on what he may have told her.

The ballroom pledge and the Beijing trip come from Schumer's remarks and press reports. Nothing in them links either to a specific policy decision.

The board has said it will "provide further updates as appropriate." Until it does, and until the court rules on whether the Kistenmacher complaint can proceed, the main questions are whether the investigation finds any compromise of national security, and whether Nvidia's earlier statements about the relationship were misleading.