NVIDIA scandal fails to quell tech bulls as spying probe expands

Hello, this is Leonie Kidd from today’s Morning Squawk.

Nvidia is dominating the headlines, but that doesn’t mean it’s holding back the bulls.

The solid rally across Wall Street by some big chip names came against a backdrop of serious concerns about the future of Jensen Huang’s leadership and what it means for the AI ​​giants.

But the devil is in the details…

There are some important developments in the Nvidia scandal, as the AI ​​giant could face an FBI investigation into the conduct of CEO Jensen Huang.

President Donald Trump said at a White House press conference on Monday that he had spoken to Mr. Huang, and the CEO said he had no knowledge that the woman he was having an affair with “was a spy” for China. President Trump also said, “I am aware that the FBI is investigating.”

Other major developments:

A Los Angeles law firm filed a class action lawsuit against NVIDIA and Huang in federal court in San Jose, California, on behalf of shareholders. The defendants accuse the company of making false or misleading statements that posed a material risk to the company. Lawyer Stephen Neal has been named the board’s lead independent director and has emerged as a key figure in Nvidia’s internal investigation into Huang. The lack of succession planning is a concern for investors. CNBC analyzed who Hwang’s direct reports are and who could take over if he is forced to resign.

Nvidia stock is up premarket, rising about 1% after falling more than 4% on Monday.

Cramer’s take: Jim Cramer said investors need to prepare for “Nvidia without Jensen,” adding that with Hwang out, “we will no longer be bound by the CNBC Investment Club’s default view of ‘own, don’t trade.'”

Chip stocks have been mixed in premarket trading following Monday’s strong rally.

Broadcom and AMD made the biggest gains, along with the Magnificent Seven, including Amazon, Alphabet, Tesla, and Microsoft.

Neocloud group CoreWeave is scheduled to report earnings later today. CNBC’s Seema Modi is keeping an eye on whether NVIDIA has any influence, as one of its largest shareholders is actually involved in formulating the strategy.

Why it matters: Pressures remain, with some CoreWeave bonds maturing in 2031 yielding more than 16%. Spreads on five-year credit default swaps, which provide insurance against default, are more than 1,240 basis points (bp), up 50% in the last month.

Nvidia was absent from the Wall Street meeting, the S&P posted its best trade since April, the Dow added more than 1,000 points and the Nasdaq rose 2%.

Brent and WTI continued their declines this morning as falling oil prices pushed all major markets higher. Brent crude oil prices fell below $90 per barrel for the first time since August.

Investors can keep an eye on key inflation indicators on Tuesday when the October Consumer Price Index report is released at 8:30 a.m. ET.

Estimates call for headline growth of 0.3% and core growth of 0.2%.

Why it matters: Pump prices fell more than 4%, according to the October EIA, but Federal Reserve officials warn that other price pressures may be difficult to contain. Employment Surprise: Employment growth was surprisingly strong in October. CNBC investigated how AI can add roles rather than remove them. Read more about three unexpected reasons for the surprising uptick in employment data.

A Republican lawmaker has taken the unusual step of pushing for impeachment against a member of his own party.

Rep. Thomas Massie (R-Ky.) has filed an article of impeachment against Defense Secretary Pete Hegseth, urging a vote in the House this week.

Why it matters: President Trump said Monday night that he would support Hegseth even if he were impeached. What’s next?: Hegseth is scheduled to hold a press conference from the Pentagon later today. His most recent press conference was on May 5th.

FDA warns of vision loss risks associated with popular GLP-1 drug

The U.S. Food and Drug Administration is requiring new safety warnings for all GLP-1 drugs after finding evidence of a potential increased risk of rare eye diseases, the agency announced Monday.

Nonarteritic anterior ischemic optic neuropathy (NAION), which can cause sudden vision loss, is rare and a causal relationship has not been established.

The FDA said it is asking manufacturers of all GLP-1 drugs to add warnings about the possible increased risk of NAION with the use of these drugs.

—CNBC’s Dan Mangan, Raya Neelakandan, Annie Palmer, Jordan Nove, Jeff Cox, Alex Harring, Elsa Oren and Garrett Downs contributed to this report.

Jack Summers and John Meloy edited this version.