Nvidia shareholders filed a class-action lawsuit against Jensen Huang and the company on Monday, a day after the CEO admitted to an affair with a woman suspected of spying for China, deepening a crisis that is starting to loosen his grip on the world’s most valuable chipmaker.

A group of shareholders filed the suit in the U.S. District Court for the Northern District of California, accusing Huang and Nvidia of violating federal securities law and demanding compensation for heavy losses.

The plaintiffs argue that Nvidia’s stock plunged after Huang’s affair with Alice Huang and the potential national security risks posed by her former employer, Singapore-based Megaspeed, came to light. Nvidia shares fell 4.27 percent on the New York Stock Exchange on Monday, wiping out $192.1 billion in market value in a single day.

Suspicions about Alice Huang are also growing.

In early 2025, she and a Chinese business partner, Kang Wei, courted Chinese investors for a data center project in Southeast Asia worth hundreds of millions of dollars, the Financial Times reported Monday. While pitching the project, she boasted that securing Nvidia’s advanced GPUs would pose no problem, according to the report, even though current U.S. export controls bar Chinese companies from directly owning data center assets such as Nvidia’s advanced GPUs.

Kang was also reportedly confirmed to be a director of Guilin Bank, a state-linked regional lender in China’s Guangxi Zhuang Autonomous Region, adding to questions about her ties to the Chinese state.

Alice Huang also reportedly touted Chinese e-commerce company Alibaba as a major customer of the data center venture while pitching investors. Alibaba had in fact lent money through its Singapore subsidiary to the Malaysian subsidiary of Megaspeed, where Alice Huang was an executive, in 2024. As a result, Megaspeed’s assets ballooned from $33 million to $3 billion over the course of that year.

Megaspeed was originally 7Road International, the Singapore subsidiary of Chinese gaming company 7Road Holdings, which has ties to state-backed investors. 7Road Holdings spun it off in 2023, after which it was renamed Megaspeed. Since then, the company has built data centers across Southeast Asia for Chinese clients such as Alibaba, buying up large volumes of Nvidia GPUs in the process.

Based on these ties, U.S. authorities have suspected Megaspeed of serving as a back channel for smuggling advanced chips from the United States into China. The U.S. Commerce Department began investigating the company and Alice Huang in 2024, after Megaspeed started shipping billions of dollars’ worth of advanced Nvidia AI equipment into Malaysia. But the probe was halted and handed to the Justice Department after Nvidia's executive vice president and general counsel, Tim Teter, contacted the Commerce Department by email in August 2025, The New York Times reported.

Alice Huang’s resume has also come under scrutiny. A profile on a Chinese private equity information website says she began her career as a reporter at China Central Television (CCTV) and the regional broadcaster Hunan TV before moving into finance, where she worked at HSBC, served as a director at Shanghai Hexi Investment and became a vice president at the state-owned CITIC Group. However, none of those companies have officially confirmed her employment so far.

Alice Huang became a Megaspeed executive in early 2023, according to The Wall Street Journal and other outlets. She is a Chinese national, and her English fluency reportedly helped her build a wide network in the chip industry. She and Jensen Huang reportedly first met at an Nvidia event in California in early 2024 and met again at Computex, an annual computer and technology trade show, in Taiwan later that year.

While the lawsuit may be indicative of growing discontent with the CEO, his grip on power appears to remain strong. Nvidia’s board has said an independent committee will investigate the allegations against Huang, but it is unlikely to break his hold on the company, The New York Times reported. Four of the board’s 10 directors are longtime allies of Huang, including people from the venture capital firms that backed Nvidia at its founding and former executives of partner companies from the 1990s.

The company has warned in a notice at a shareholder meeting that it relies heavily on the capabilities of its long-serving executives and does not have a succession plan in place. Even if Huang steps down, family members already deeply involved in running Nvidia could take over, including his daughter Madison Huang, son Spencer Huang and his son-in-law, Nico Caprez.

However, unlike many other Big Tech founders, he has no dual-class shares or other means of defending his control, and he owns only 3.58 percent of Nvidia.

Jeffrey Sonnenfeld, a professor at the Yale School of Management, told TechCrunch that Huang’s career is salvageable but put his odds at “about a 50-50.” Even if Huang was merely naive, Sonnenfeld said, “any employee at Nvidia other than him would be fired over this.”

The professor added that boards in crisis often reach for a “messianic solution” from outside, floating former Google CEO Eric Schmidt as one possibility.

BY LEE SEUNG-HO [lee.jian@joongang.co.kr]