Shares of Nvidia fell nearly 5 percent in US premarket trading on Monday, extending the previous week's selloff and pushing the stock to fresh multi-month lows. The decline followed reports of an internal investigation into whether CEO Jensen Huang had been targeted by a foreign intelligence operation, raising concerns about leadership stability at the world's most valuable semiconductor company.

The investigation reportedly followed media coverage of Huang's alleged relationship with Alice Huang, an unrelated former executive of Singapore-based company Megaspeed. According to reports, US authorities had investigated Alice Huang and concluded that she was a Chinese intelligence asset. The allegations have raised questions about whether sensitive corporate or strategic information could have been exposed.

Huang reportedly addressed Nvidia employees and acknowledged being unfaithful to his wife, although he did not disclose details of the relationship. The situation has attracted significant attention because of Huang's central role in Nvidia's operations, strategic direction and position in the global artificial intelligence industry.

Huang is Nvidia's fifth-largest shareholder, holding approximately 3.6 percent of the company, according to LSEG data. He also maintains considerable operational control through an unusually flat management structure in which dozens of senior executives report directly to him. However, unlike companies such as Meta Platforms and SpaceX, Nvidia does not have a dual-class share structure that would provide its co-founder with majority voting control.

The potential implications of the investigation have raised concerns among investors. Nvidia's shares could lose approximately $250 billion in market value compared with their previous closing level if the premarket decline is sustained.

Chris Weston, head of research at Pepperstone, said the controversy could weigh on Nvidia's stock at a time when investors are already questioning the sustainability and scale of global data centre investments. However, he expressed doubt that Huang would be replaced, noting that a genuine possibility of his departure would likely trigger a significantly larger market reaction.

Nvidia's board has reportedly expressed confidence in Huang. Nevertheless, some analysts believe the company does not have an obvious internal successor with comparable influence and leadership capabilities, making the situation particularly sensitive for investors.

The controversy has also attracted reactions from prominent business leaders and political figures. Billionaire investor Bill Ackman described Huang as an incredible individual but said that any potential national security implications would represent a serious concern. Tesla CEO Elon Musk also agreed with a social media post criticising Huang's reported conduct while acknowledging his importance to American AI leadership.

US President Donald Trump said he had not spoken to Huang about the allegations but described him as an honourable person and expressed hope that the situation would be resolved. Reports also indicated that Trump had been briefed about the intelligence findings approximately a year earlier.

The developments have extended to Nvidia's operations in South Korea. Madison Huang, Jensen Huang's daughter and an Nvidia executive, cancelled a planned visit to Seoul, where she was scheduled to meet South Korean technology companies, including AI startup Rebellions and Kakao Mobility. Rebellions attributed the cancellation to unavoidable internal circumstances at Nvidia.

Despite the cancellations, Nvidia AI Day Seoul, a two-day conference expected to attract approximately 2,000 participants to discuss physical AI, agentic AI and infrastructure, is expected to proceed as scheduled.

Meanwhile, Nvidia's key Asian semiconductor suppliers recovered on Monday following the previous week's selloff in AI-related stocks. Taiwan Semiconductor Manufacturing Company (TSMC) closed 4.7 percent higher, while Samsung Electronics and SK Hynix gained 0.6 percent and 0.4 percent, respectively.

Analysts cautioned that a prolonged investigation or internal review could potentially delay Nvidia's investment decisions and product launches, creating uncertainty across the semiconductor industry. Advanced Micro Devices could attract greater investor attention in the short term as a potential beneficiary of any concerns surrounding Nvidia's leadership.

However, analysts believe Nvidia's products and technological capabilities would be difficult to replace, limiting the potential disruption to its competitive position. Shipments to China could nevertheless face additional delays depending on how the situation develops.

South Korea's deputy science minister also indicated that the government did not expect disruptions to contracted deliveries of Nvidia graphics processing units, suggesting that existing supply commitments remained unaffected at that stage.