Nvidia’s Jensen Huang faces prosecution by Congress over extramarital affair scandal

Nvidia CEO Jensen Huang’s close relationship with the U.S. government was already poised to ease with Democrats gaining control of Congress and promising far more oversight of AI development than the semiconductor giant had experienced under Republican leadership.

That was before Mr. Huang admitted on Sunday that he had had an affair with a businessman who intelligence agencies say was a Chinese spy. The woman, Alice Huang, is affiliated with an Nvidia customer called MegaSpeed, who is accused of helping a regulated Chinese company acquire Nvidia’s artificial intelligence chips.

On Sunday, Hwang apologized in writing to employees for “unfaithfulness to his wife” and said the board was investigating related national security concerns. Nvidia’s board said it has “confidence” in Jensen, who co-founded the company in 1993 and has led it since then, amassing a net worth of more than $150 billion in the process.

Even before last week’s midterm elections, in which Democrats won supermajorities in both houses of Congress, vocal party leaders had been demanding answers from Huang about China’s access to advanced Nvidia chips and his company’s lobbying efforts for favorable legislation. “We must pass bipartisan legislation to keep advanced AI technology out of the hands of China,” Massachusetts Sen. Elizabeth Warren said days before the election, when the spying allegations first surfaced. A few months earlier, in June, Mr. Huang turned down Mr. Warren’s invitation to testify before the Senate Banking Committee.

“Congress will investigate and get answers,” Delaware Sen. Chris Coons, who is slated to become chairman of the Senate Foreign Relations Committee, wrote in the X on Saturday after allegations published in Friday’s New York Times report as Democrats look to take the gavel.

It’s a sharp reversal for Hwang, who rose to prominence alongside President Donald Trump and worked closely with the administration in its efforts to limit AI regulation. Nvidia shares plunged 12% in the two days after the election, matching a decline in AI stocks amid concerns that incoming federal and state legislators and a slew of newly passed ballot measures will slow population growth and put a brake on the AI ​​boom.

Huang is a unique figure in the AI ​​industry, as his company’s technology is used to train nearly every major AI model. He has also turned Nvidia into a vital source of funding for AI startups, bringing together some of Wall Street’s biggest names and announcing plans in August to raise $500 billion to invest in the buildout.

At Nvidia, Huang is the company’s only public face, with no clear second-in-command. He decides which projects are strategic priorities and frequently sends short emails to individual engineers for details. Hwang said he has 60 direct reports and is reviewing the salaries of all employees. Meanwhile, he’s packed his calendar with meetings with world leaders and CEOs, alongside keynote speeches at conferences and trade shows.

“NVIDIA is no ordinary company, and Mr. Jensen is no ordinary CEO. He is NVIDIA,” Bernstein analyst Stacey Rasgon wrote in a note Sunday, adding that it was not clear who would succeed him.

Patrick Moorhead, CEO of Moor Insights & Strategy, said in an email that NVIDIA is able to move faster than anyone else because Jensen has so much power.

Unlike many of his technical colleagues, Huang is not chairman of the board. Rather, he is one of 11 board members and there is no designated chair.

An investor close to Hwang told CNBC that Hwang could be placed on administrative leave depending on the results of the board’s investigation.

“Today’s news will not slow NVIDIA’s momentum,” a company spokesperson said in a statement. “Jensen is committed to continuing to lead Nvidia as CEO without interruption.”

But with Nvidia expected to come under increased scrutiny on Wall Street and in Washington, Mr. Huang’s level of influence is almost certain to change.

He is an advocate of expanding chip exports to China, arguing that it is better for China’s AI research labs to build on American technology rather than encourage the development of domestic alternatives. Mr. Hwang accompanied President Trump on his trip to China aboard Air Force One in May, now raising further questions about what the administration and Mr. Hwang knew about Chinese spies at the time.

Sam Bresnick, a researcher at the Center for Security and Emerging Technologies, said one question Democrats are likely to pursue is whether the Trump administration was aware of Huang’s ties to the suspected Chinese spy and whether the Nvidia CEO influenced U.S. policy.

“This is going to be very high on the list of targets for Democrats to investigate as they try to figure out how aware the Trump administration was of what was going on,” Bresnick said.

But the pressure isn’t just coming from Democrats. House Republican leaders have already asked Hwang to hold a private conference later this month on the Chinese spying issue.

President Trump has continued to support Hwang, telling reporters on Sunday that Hwang is an “honorable man” and has “done a great job for our country.”

“I think he probably has an excuse,” Trump said of the incident.

Amid all the fuss over election results and spying revelations, NVIDIA is facing a critical moment in the market.

neo cloud coreweave and NeviusBoth companies are backed by Nvidia, a major buyer of the company’s chips, and are scheduled to report earnings this week after their shares have roughly halved in the last month. Investors are particularly concerned about the high debt levels and how they will continue to raise money amid rising interest rates and cautious lenders.

Nvidia will release its own earnings report on November 17th, when Huang will likely face questions from analysts, assuming he sticks to the typical format. And then there’s Anthropic’s initial public offering. This is very important to Nvidia as it is an investor in Claude’s creator and counts AI Labs as an important customer.

A few weeks after the earnings call, Nvidia is hosting a large conference in Washington, D.C., where Huang is scheduled to give the keynote speech on December 1st.

Bullish investors and analysts can still point to the insatiable demand for Nvidia’s technology. The company recently predicted a 70% increase in sales next year. Analysts surveyed by FactSet expect 2028 sales to be close to $694 billion.

“It is unlikely that demand for our products will be affected,” Rasgon wrote. “However, it is plausible to assume that (regulatory and other) risks will increase as AI enhancement becomes an increasingly political issue.”

—CNBC’s Seema Modi, Katie Tarasoff, Ashley Caputo and Mackenzie Sigalos contributed to this report.

Spotlight: Nvidia’s importance to U.S. national security