What happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 6.3% in the afternoon session after the company's board of directors retained law firm Wachtell, Lipton, Rosen & Katz and former federal prosecutor Joon H. Kim to lead an independent investigation into Chief Executive Jensen Huang.
The inquiry seeks to determine whether company secrets or national security were compromised following Huang's admission of an affair with a woman connected to Chinese intelligence, the board said in a statement reported by CNBC.
While Nvidia's board stated earlier that it has no reason to believe proprietary secrets or national security were breached, lawmakers have intensified scrutiny over whether restricted artificial intelligence chips were diverted to China.
The shares closed the day at $168.91, down 5.4% from the previous close.
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What is the market telling us
Nvidia’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 4.4% on the news that the company's board of directors initiated an independent investigation into reports that founder and CEO Jensen Huang was targeted by foreign intelligence. In a statement from Nvidia's board of directors, the company announced that the probe is overseen by independent directors and outside counsel, noting it has no reason to believe that trade secrets or national security were compromised.
Nvidia is down 10.4% since the beginning of the year, and at $169.17 per share, it is trading 29.3% below its 52-week high of $239.24 from October 2026. Despite the year-to-date decline, investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $5,743.
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