Nvidia's board of directors convened Wednesday night to decide whether to remove co-founder and CEO Jensen Huang, two sources told CNN, as the AI chip giant's stock absorbed a brutal sell-off tied to a scandal involving an alleged Chinese intelligence operative.

Huang has acknowledged an extramarital affair with Alice Huang (no relation), a Chinese citizen who held a senior position at Megaspeed, a Singapore-based data center operator that U.S. officials say bought nearly $5 billion worth of Nvidia's AI chips. American intelligence officials believe the woman has ties to China's intelligence services, according to reporting relayed by The Globe and Mail. The New York Times has since reported a second alleged affair, this one with an Nvidia executive who reports directly to Huang.

Nvidia's board opened an independent investigation into the matter last week and initially backed Huang, saying it had confidence in him and the leadership team and no reason to believe company secrets had been compromised. A company spokesman insisted the news would not slow Nvidia down. China's foreign ministry has dismissed the spying allegations outright, with a spokesman calling them baseless smears against China.

Markets React

Wall Street hasn't waited for the board's verdict. Nvidia shares fell roughly 9.5% across Monday and Tuesday's trading, then slid another 7% to 8% in after-hours trading Wednesday following a Wall Street Journal report that the board was preparing to remove him entirely. For a company whose multitrillion-dollar valuation has made it the bellwether of the entire AI trade, the swing wiped out hundreds of billions of dollars in market value within hours.

"TODAY'S NEWS WILL NOT SLOW NVIDIA."

Analysts have warned Nvidia has no clear succession plan for Huang, who has run the company since its founding in 1993 and is widely seen as inseparable from its identity as the dominant supplier of AI chips. Removing him abruptly, several noted, could rattle a company whose fortunes are more tightly bound to a single executive than almost any other in corporate America.

What Happens Next

CNN reported the board was meeting specifically to determine Huang's future, though Nvidia had made no public comment on the deliberations as of Wednesday night. Neither Huang nor Alice Huang has been charged with any crime, and Nvidia's board has said its probe so far found no evidence trade secrets were compromised. But the investigation — and the board's decision on Huang's job — remained unresolved at publication time, according to CNN's live coverage of the fallout.