Nvidia stock sinks 4% as chipmaker investigates CEO Jensen Huang's relationship with alleged Chinese spy

Nvidia ($NVIDIA(NVDA)$  ) stock fell as much as 8% before trimming losses on Monday after the chipmaker's board announced it would investigate the relationship between CEO Jensen Huang and a woman whom the intelligence community believes could be a Chinese Spy.

In a Sunday memo to employees, Nvidia CEO Jensen Huang admitted to an extramarital affair, apologizing to his family and staff while pledging full cooperation with an independent board review. Wall Street analysts quickly flagged the heightened 'key-person risk' for the world's leading AI chipmaker.

"Jensen is the core DNA of Nvidia, and its AI success and ambitions are heavily tied to him staying on as CEO. Jensen is not replaceable," Yorkville Ives's Dan Ives wrote on Monday morning.

A look across the semiconductor sector showed the risk damage was largely contained to Nvidia. Shares of rival AMD (AMD) bounced 8% following a rating upgrade to Buy from Oppenheimer analysts. Broadcom (AVGO) rose 6%, while Intel (INTC) edged up 2%.

Shares of Taiwan Semiconductor Manufacturing Company (TSM), which manufactures Nvidia chips, rose nearly 2%, while semiconductor equipment maker ASML (ASML) also gained 3%.

Storage maker SanDisk (SNDK) moved up 1%. Memory chip maker Micron Technology (MU) rose more than 1%, while SK Hynix (SKHY) was little changed.

Other chip-related stocks include processor maker Qualcomm (QCOM) and semicondcutor designer Arm Holdings (ARM), both moving minimally.

Meanwhile, Alphabet (GOOGL) shares rose more than 2% in early trading on Monday after the tech giant introduced two new tensor processing units, or TPUs. Alphabet has been accelerating its homegrown AI chip business, introducing four TPU systems in a single year.