Nvidia shares plunge 7% as controversy surrounds CEO Jensen Huang

Nvidia shares plunged 7.03% in early trading on Monday after reports that CEO Jensen Huang had been targeted in a foreign intelligence operation triggered concerns over the company's leadership and regulatory risks.

The stock was trading at $173.51 at 9:32 am ET, down $13.12 from its previous close of around $186.64 on Nasdaq. Shares had already fallen in post-market and pre-market trading.

The controversy centres on Huang's admission that he had been unfaithful to his wife. He also apologised to his family, colleagues and employees in a message on Sunday.

Media reports have identified the business executive involved as Alice Huang, a former executive at Singapore-based data centre company Megaspeed International. US intelligence agencies reportedly believe she was gathering information for Beijing.

Nvidia's board has announced an independent investigation into reports that Huang was targeted by a foreign intelligence operation. A committee of independent directors, assisted by outside counsel, will oversee the inquiry.

The board said it had no reason to believe that US national security or Nvidia's confidential information had been compromised. Huang has agreed to cooperate with the investigation.

China has rejected the allegations. Foreign Ministry spokesperson Guo Jiakun described the claims as "entirely baseless vilification and smearing".

Meanwhile, brokerage Bernstein maintained its Outperform rating on Nvidia but warned that the controversy could distract the company and increase regulatory scrutiny.

The brokerage also flagged Nvidia's dependence on Huang, who has been central to its strategy and operations. It said uncertainty surrounding his leadership could weigh on the stock as the investigation progresses.