Nvidia (NASDAQ: NVDA), the AI chip maker, and chief executive Jensen Huang face a proposed shareholder class action over his relationship with an executive at customer Megaspeed. The suit was filed yesterday, the day the shares shed about $192bn of market value.
Nvidia closed yesterday at $178.67, down 4.27% from $186.64, and fell as low as $170.24. The stock is 25.3% below its close on the 6th of October, its lowest close in the data going back to the 3rd of August.
Shareholder Mark Kistenmacher, represented by Rosen Law Firm, filed the complaint in the US District Court for the Northern District of California, according to Decrypt. The class period runs from the 9th of October 2025 to Sunday the 8th of November 2026. It alleges four statements were misleading, including two by Rizzo in October 2025 that employees had found no evidence of chip diversion at Megaspeed.
The others were a Rizzo remark last month that Huang’s dealings with Alice Huang were unremarkable, and Huang’s description of Megaspeed dealings as normal in a Bloomberg interview on the 30th of October. The complaint alleges Alice Huang is a suspected Chinese spy; China rejects that. It claims under Section 10(b) and Section 20(a) of the Securities Exchange Act and seeks unspecified damages. These are allegations, not findings.
Nvidia’s board has opened an independent investigation, says it has no reason to believe confidential information or national security was compromised, and has reiterated confidence in Huang. He has apologised to employees, and the FBI is reportedly looking into the matter.
The commercial exposure is chip diversion. Bloomberg reported that Nvidia’s general counsel contacted the head of the Commerce Department’s export-control bureau in late 2025 about a probe of suspected chip smuggling by Megaspeed, which denies it. Commerce has declined to restrict Nvidia’s dealings with the company.
Analysts have not turned negative on the stock. Vivek Arya of Bank of America, who rates Nvidia Buy, said:
We would not equate allegations with proven business damage.
Vivek Arya, Bank of America
Mizuho has reportedly cut its target to $250 from $315 but kept Outperform.
Results come after the US close next Tuesday, with consensus earnings per share of $2.49. Until then, the board review and the FBI inquiry are likely to be the swing factors for the stock.