NYT reports second relationship for Nvidia CEO with direct report

The Huang controversy now revolves around corporate governance rather than national security, making it easier for investors to assess and harder for the board to ignore. A relationship with a subordinate brings up code-of-conduct concerns and broadens the scope of what the board's review must cover. Huang is deeply tied to Nvidia's strategy and client relationships, so any suggestion of a leadership change would be a material risk for the stock. Given Nvidia's weight in the S&P 500, that risk also affects broad index exposure. The board's investigation is likely to vie for attention with guidance during next week's earnings call, and headline-driven swings are expected around the November 17 results and the November 18 House briefing.

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The story is now becoming gossip magazine material. This could prove to be the final nail for Huang.

Earlier:

• Lutnick holds up Trump's third Nvidia chip diversion crackdown this year, Axios says
• Huang's affair with suspected Chinese spy creates three risks for Nvidia shares

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The Huang controversy now extends beyond China concerns. A relationship with a subordinate puts Nvidia's code of conduct squarely into the board's investigation.

Summary:

• The New York Times reported, citing five former employees, that Jensen Huang had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reports directly to him.
• Nvidia's code of conduct instructs employees to avoid conflicts such as personal relationships and claims it investigates misconduct promptly.
• The board is already investigating Huang's relationship with Alice Huang, whom US officials identified as a Chinese intelligence asset, with Wachtell, Lipton, Rosen & Katz leading the review.
• China has denied the espionage accusations, and Nvidia has said earlier claims that Megaspeed diverted chips were proven false.
• Three House committee chairs have requested a closed-door briefing with Huang, reportedly on November 18.
• Nvidia will report third-quarter earnings on November 17.

Jensen Huang, Nvidia's CEO, had an extramarital relationship with Kimberly Powell, the vice president of health care who reports directly to him, according to the New York Times, which cited five former employees. The relationship was previously unreported. It adds to the scrutiny on the head of the world's top AI chipmaker, just under a week before Nvidia's quarterly earnings report.

This report is significant as a governance matter, not merely a personal one. Nvidia's code of conduct requires staff to avoid situations leading to conflicts, including personal relationships, and states that misconduct reports are investigated promptly. Many major corporations prohibit managers from having relationships with subordinates, since such ties can raise issues regarding compensation, advancement and oversight. According to the Times, both Huang and Powell are married to other people.

The new allegation adds to an existing investigation. Last month, the Times reported that US officials identified Alice Huang as a Chinese intelligence asset. She is an executive at Megaspeed, a Singapore-based data center company, and had grown close to the Nvidia CEO. She is not related to Jensen Huang. After he acknowledged an affair with her, Nvidia's board launched an investigation this month, led by Wachtell, Lipton, Rosen & Katz. The board stated it has no reason to believe national security or company secrets were compromised. China has denied the espionage allegations, and Alice Huang has not commented when approached.

Nvidia has also disputed the broader allegations. The company said earlier claims that Megaspeed diverted chips were investigated and debunked last year, and Jensen Huang has described the company's transactions with Megaspeed as routine.

Washington pressure is also mounting. The Republican chairs of three House committees have requested that Huang participate in a closed-door briefing regarding his dealings with Alice Huang, reportedly scheduled for November 18. That falls the day after Nvidia's third-quarter earnings on November 17, when investors will be looking for any mention of the board's review alongside financial results. Huang co-founded Nvidia in 1993 and grew it into the leading provider of AI chips, making the question of the company's dependence on him particularly acute for shareholders.