Nvidia lost $470 billion in market value in two days as the espionage scandal surrounding CEO Jensen Huang deepened, and the damage now reaches from Silicon Valley balance sheets to Donald Trump's meeting with Xi Jinping.

The company, worth $5 trillion at its peak and long the most valuable in the world, has slipped to third place behind Apple and Microsoft. Huang himself saw his fortune fall from $160 billion on Monday to $146 billion by Tuesday evening, dropping from eighth to twelfth place in the Forbes ranking. Shares recovered part of Monday's and Tuesday's losses on Wednesday, but investors are already filing class action lawsuits.

Lawmakers from both parties have voiced "significant national security concerns," and Huang must answer questions in the US Congress in the coming week — the same week Trump meets Xi Jinping on the sidelines of the APEC summit in Shenzhen.

What does the affair change for Huang and Nvidia?

Huang, 63, co-founded the chipmaker in 1993 and built it into the world's most important semiconductor company. He is also one of the Silicon Valley executives closest to the White House. That combination now works against him.

The investigation concerns his relationship with Alice Huang, 42, no relation, who is suspected of being a Chinese spy. She held a management position at Megaspeed, a Singapore-based company through which Nvidia chips worth several billion dollars are believed to have been smuggled into China. According to the New York Times, Nvidia may have tried to intervene in a US Department of Commerce investigation into Megaspeed.

In Washington, the debate over whether Huang can remain CEO is in full swing — although no clear succession plan exists. His possible replacement could trigger another industry earthquake or calm markets; that question remains open.

How much pressure was AI already under?

The scandal hit an industry already under strain. Democrats want tighter AI regulation, and after their landslide victory in the midterm elections, chip and tech stocks crashed.

One indirect consequence: Anthropic's valuation fell from $2 trillion to a maximum of $1.5 trillion shortly before the Claude developer's IPO. The Nvidia affair compounds that pressure across the sector.

As one observer wrote online: "If the AI bubble bursts because of a honey trap, this would be the stupidest economic crash in history."

Why does the scandal put Trump on the defensive?

Trump expects Xi Jinping to raise the Nvidia affair in Shenzhen. Beijing denies the espionage accusation and calls it "defamation." The recent thaw between the superpowers, one of Trump's signature achievements, now risks turning into a new ice age.

At home, the president faces questions about his own handling of the matter. According to US media, he was first warned about it roughly a year ago and took no action. He publicly defended Huang even after the CEO's adultery confession.

The ties run deep:

• Huang flew with Trump on Air Force One to Beijing in May for a state visit.
• He attended a state banquet for Xi at the White House in September.
• According to the Los Angeles Times, senior intelligence officials have now briefed the "Gang of Eight" — the leading members of Congress — on a national security crisis related to Nvidia.

What role did export controls play?

Beyond the espionage accusation against Alice Huang, investigators suspect that state-of-the-art Nvidia chips worth several billion dollars reached China illegally. Huang has been among the most vocal critics of US export controls throughout.

In 2025, he persuaded Trump to ease export bans on some of Nvidia's most advanced chips. That concession now looks like a liability for both men: it gave Beijing a pathway, and it gave Trump's critics a timeline to scrutinize.

For practitioners, the story changes three things at once. Nvidia's governance is under congressional scrutiny with no successor visible. The AI sector's regulatory risk has hardened into concrete valuations, as Anthropic's $500 billion haircut shows. And US-China relations, briefly thawing, now hinge on a meeting in Shenzhen that neither side can afford to let fail quietly.