Nvidia Shares Rebound 2.9% to $173.73 as Wachtell Takes Over Huang Probe, Six Days Before Earnings

Since Nvidia's board opened an inquiry into CEO Jensen Huang on Sunday, Nov. 8, the stock has fallen hard and now bounced. Shares closed up 2.9% today at $173.73, narrowing the market value lost since Friday's close to $311 billion, according to the Guardian's tally.

The rebound followed a 5.47% drop Tuesday and a 4.3% drop Monday. CoreWeave also helped lift AI stocks today, jumping more than 24% after reporting strong revenue growth.

Who is running the investigation

Nvidia's board hired New York firm Wachtell, Lipton, Rosen & Katz for what it calls a "thorough and independent" investigation. The work will be led by Wachtell partner Joon Kim, a former prosecutor in New York whose firm biography lists internal investigations and white-collar defense among his specialties.

A committee of independent directors will oversee the probe. Nvidia gave no timeframe.

The company said Huang will keep leading the business "without interruption." The inquiry has two questions: whether Huang was the target of a foreign intelligence effort, and whether Nvidia secrets or national security were compromised. The board has said it has "no reason to believe that either national security or Nvidia secrets were compromised."

People familiar with the matter told CNBC that Huang tried to project "business as usual" on his return to the office Monday. He was back in meetings Tuesday.

What is alleged, and what is not

Huang admitted Sunday that he had been unfaithful to his wife. He did not refer directly to Alice Huang, no relation, a former executive at Singapore-based Megaspeed. Nvidia had first denied an improper relationship with her.

US intelligence agencies warned senior officials they believe she is an asset of China's Ministry of State Security, according to reporting by The New York Times and the Financial Times. No charges have been announced against anyone. No public finding establishes that she worked for Chinese intelligence.

China denies it. A foreign ministry spokesperson said Monday that the narrative about Chinese spies is "entirely based on groundless speculation" and amounts to "slander and smearing."

Megaspeed said on LinkedIn that US authorities found "no evidence of any violations concerning the illicit transfer of chips or any illegal activities."

A short seller saw it in May

Christian Lamarco of New York's Culper Research published a 40-page report in May on Huang's ties to Alice Huang. Culper disclosed it had bet against Nvidia stock, so it profits when the price falls.

Lamarco drew on interviews with employees of Chinese companies, Singaporean and Malaysian corporate filings, and social media posts. He wrote that Huang appeared to have an "uncomfortably close relationship" with her.

Culper also claimed that over 20% of Nvidia's fiscal 2026 compute revenue was driven by China through illegal chip diversion and Southeast Asian intermediaries. It said corporate filings suggest Alibaba financed Megaspeed's chip purchases. Those are the firm's allegations. Nvidia did not immediately respond to CBS News's request for comment on the report.

The diversion concern did not start with Culper. In a March 23 letter to Commerce Secretary Howard Lutnick, Sens. Elizabeth Warren and Jim Banks warned of a "large-scale diversion of advanced American AI chips to China through Southeast Asian intermediaries."

Wall Street weighs in

Morgan Stanley removed Nvidia from its top-pick list today. The stock had dropped more than 25% since it was added Oct. 2. Analysts there called Huang's leadership "crucial" to Nvidia's strategic direction.

Bank of America analyst Vivek Arya laid out three scenarios in a Tuesday note. In one, the impact is contained and leadership continues. In another, prolonged uncertainty weighs on valuation before earnings. In the worst, "adverse findings, leadership disruption or tighter restrictions" require an earnings reassessment.

Zacks chief equity strategist John Blank said the selloff reflects fear of new US restrictions and fear that more problems will surface. "What else has Jensen done?" he said. "It's certainly not good for the AI trade."

Shareholders have also filed a proposed class action accusing Nvidia and Huang of failing to adequately disclose details about the affair and its potential business risks. The allegations are unproven.

The board has no chair at the moment, so lead independent director Stephen Neal is managing the committee overseeing the probe.

US Ambassador to China David Perdue told Bloomberg Television the episode is "another reminder that we have to stay diligent," adding that "economic security is national security."

What comes next

Nvidia reports quarterly earnings Nov. 17. Wachtell has no announced deadline, so the company may face analysts and investors before the board has any findings to share. Whether Huang takes questions on the affair and the China allegations on that call is the first open test of how much the board wants to say.

A House deadline for Huang to respond to a briefing request also fell today.