Nvidia and its chief executive, Jensen Huang, were accused of misleading shareholders in a California lawsuit over a Chinese spying scandal surrounding the $4.3tn chipmaker. Huang co-founded Nvidia in 1993 and has led the California company as it became the world’s most valuable chipmaker, making him one of the most prominent figures of the artificial intelligence boom.
Nvidia shares closed down 4.3% on Monday, cutting the company’s market value by about $190bn. The lawsuit was filed five minutes after the US stock market closed.
Shareholder suits after unexpected share-price declines are common. Several US law firms have also announced inquiries into whether Nvidia misled investors and have asked shareholders to contact them.
Shareholders led by Mark Kistenmacher, a retail investor, are seeking unspecified damages in a class action, a suit brought by a person or small group on behalf of a larger group of investors.
On Sunday, Huang admitted he had been “unfaithful” to his wife. He did not identify the person involved.
The dispute matters because Nvidia is the world’s most valuable chipmaker and a central supplier in the artificial intelligence boom, and the suit says the undisclosed matter raised national security concerns that threatened its reputation and business. The complaint says Nvidia and Huang did not disclose that the affair raised national security concerns capable of damaging the company’s standing and its business prospects.
The same day, Nvidia said it was conducting an independent investigation into reports that Huang was the “target of a foreign intelligence effort”. Huang was reported to have said he had “absolutely no idea that the person in question was a spy”.