• Nvidia (NASDAQ:NVDA) shares extended their decline to 8.5% in postmarket trading, according to the latest report, deepening the selloff triggered by The New York Times (NYSE:NYT) report that CEO Jensen Huang is said to have a relationship with a vice president at the company.
  • The disclosure has since escalated into a board investigation, shareholder litigation, and national-security scrutiny, with Nvidia shares falling nearly 10% over two days, erasing about $430 billion in market value.
  • Nvidia's board has retained Wachtell, Lipton, Rosen & Katz to assist its independent review, while a proposed shareholder class action alleges misleading disclosures.

Nvidia shares fell as much as 3.1% after The New York Times reported that CEO Jensen Huang is said to have a relationship with a vice president at the company. The disclosure, which initially rattled investors, has rapidly expanded into a broader governance crisis, drawing board scrutiny and legal challenges. The stock extended its decline to 8.5% in postmarket trading following the report.

Board Launches Independent Investigation

Nvidia's independent directors have retained law firm Wachtell, Lipton, Rosen & Katz to assist an investigation into the reports. The board said it has "no reason to believe" that national security or company secrets were affected, but the review is ongoing. The company has not commented on the nature of the relationship, and Huang has not been accused of criminal wrongdoing.

The controversy deepened after Huang acknowledged to employees on November 8 that he had been unfaithful to his wife. The same day, Nvidia announced the independent investigation into reports that he had been targeted by a foreign intelligence effort. His admission did not establish the espionage allegations, which Reuters (NASDAQ:TRI) could not independently verify.

Market Fallout and Shareholder Litigation

The initial 3.1% drop was followed by a 4.3% decline on Monday and a further 5.47% on Tuesday, bringing the two-day loss to nearly 10% and wiping out approximately $430 billion in market value. Despite the selloff, Nvidia's market capitalization remained above $4 trillion as of November 10, underscoring its outsize role in global markets.

A proposed shareholder class action filed in the wake of the decline alleges that Nvidia and its executives made misleading disclosures about Huang's relationship and the company's dealings with Megaspeed, a customer identified in recent reporting. The lawsuit, which seeks to represent buyers of Nvidia stock between October 9 and November 8, has not been adjudicated. Plaintiffs would need to prove misleading conduct, investor reliance, and artificial inflation of the stock price.

National-Security and Political Repercussions

The reports have also attracted scrutiny from Washington, where concerns center on whether confidential information or restricted chips reached China. Megaspeed has faced questions over suspicions that it helped Beijing obtain restricted Nvidia chips, though no proven violation by Nvidia or Huang has been established.

Reuters reported that the FBI has opened an investigation, though the target and scope remain unclear. Calls for congressional hearings have also emerged, adding to the political pressure. China's foreign ministry dismissed the intelligence allegation as "groundless." Nvidia reiterated that its board has no reason to believe any compromise occurred.

The affair has also revived memories of Nvidia's 2022 settlement with the SEC, in which it paid $5.5 million to resolve allegations that it inadequately disclosed cryptocurrency-related demand affecting its gaming business. That case, while unrelated, highlights the company's obligation to communicate material risks accurately.

Operational Strength vs. Governance Risk

The turmoil comes against a backdrop of exceptional operating performance. In its fiscal 2027 second quarter ended July 26, 2026, Nvidia reported revenue of $96.2 billion, up 106% year over year, with data center revenue of $89.0 billion, up 117%. GAAP net income reached $59.7 billion, or $2.46 per diluted share, and gross margin stood at 75.0%. The company guided to $108 billion in revenue for the following quarter, plus or minus 2%, assuming no data center compute revenue from China.

Analysts remain divided on the fallout. Dan Ives of Wedbush estimated the investigation could last four to six weeks and noted that investor discussions assign roughly a 15% chance of Huang's removal. That is one analyst's assessment, not a board timetable. Rival chipmakers have seen gains during the turmoil, with AMD (NASDAQ:AMD) rising 1.3% and Broadcom (NASDAQ:AVGO) nearly 4% on November 10, though there is no evidence of customer defections.

Nvidia did not respond to requests for comment on the investigation or the litigation. The board's findings, the shareholder case, and any regulatory developments will be closely watched in the coming weeks.