Summary
Nvidia shares fell after CEO Jensen Huang admitted to an affair, allegedly with a Chinese honeypot.
China poses three major threats to American companies: supply chain dominance, AI exploitation, and cyberespionage.
Corporate executives cannot control China, but they can anticipate vulnerabilities.
An alleged Chinese honeypot has understandably concerned Nvidia shareholders, and Nvidia stock fell approximately 5% the day after CEO Jensen Huang admitted to the affair. On Nov. 12, Huang resigned, and Nvidia shares plunged more than 12% in early trading.
Alice Huang, the woman widely believed to be Jensen Huang’s paramour, has not been confirmed as a Chinese intelligence operative, but potential national security risks and questions about Nvidia’s corporate oversight are swirling.
In fact, an Nvidia shareholder filed a proposed class-action lawsuit on Nov. 9, alleging that Nvidia and Jensen Huang misled investors about the relationship with Alice Huang and the company’s dealings with her former employer, Megaspeed.
The lurid story is just one of many China-related concerns for American corporations. If nothing else, this revelation should prompt a broader conversation about China-specific risks to American companies and, importantly, American investors.
Alleged honeypots aren’t the only nefarious Chinese activity afoot. Corporations need to be paying more attention to the documented steps the Chinese Communist Party is taking to threaten American economic security.
America’s increasingly adversarial relationship with China often obscures the extent of our economic interdependence.
American companies compete with foreign companies for resources and markets across the globe. China is not the only country American companies should be wary of. But pretending that Zimbabwe, for example, has the same incentives and resources to target American corporate executives and markets is not intellectually sound. Every country has a unique relationship with American companies, shaped by its own strengths, resources, and priorities. It is not hysteria to be wary of Chinese influence within American corporations.
Persuading your tech tycoon boyfriend to make decisions advantageous to the CCP is not the only way to influence American policy, and it wouldn’t even be particularly novel. (See: Maria Butina and Paul Erickson; Christine Fang and Eric Swalwell; Yaoning Sun and Eileen Wang.) Romantic relationships have been exploited for foreign influence for generations.
But China presents three far less sexy—and arguably more dangerous—threats to American companies and, consequently, American investors.
1. Chinese supply chain dominance
Over the last two decades, China has secured access to raw materials critical for technological development while dominating the processing of rare earth elements. This chokehold has direct consequences for American investors.
For example, Ford halted production of its Explorers for an entire week in 2025 due to Chinese export restrictions. AXT Inc. experienced delayed semiconductor shipments and missed its fourth-quarter 2025 revenue guidance, while LightPath Technologies faced increased material costs and was forced to cancel customer orders due to Chinese restrictions on germanium exports.
2. Chinese exploitation of American artificial intelligence tech
China has increasingly sought to exploit American advances in artificial intelligence for its own technological and military development.
In 2024, researchers linked to China’s People’s Liberation Army adapted Meta’s Llama model for potential military applications. More recently, a former Google engineer was convicted of stealing thousands of pages of information about confidential AI technology for Chinese business ventures. These activities threaten American companies’ intellectual property, competitive advantages, and ultimately, shareholder value.
3. Chinese cyberespionage targeting American telecommunications
Chinese state-affiliated hackers have targeted major American telecommunications companies, including Verizon and AT&T. The Salt Typhoon cyberespionage campaign compromised their networks, exposing sensitive communications and customer information. Breaches threaten national security while exposing companies and their shareholders to potential regulatory, legal, and financial risks.
Unfortunately, the Huang saga involves two of the three threats; the alleged smuggling of Nvidia chips to China by Alice Huang accelerates the exploitation of American AI tech and enhances China’s cyberespionage capabilities.
Across industries, these three threats may look different, but their consequences for American investors are remarkably similar. Supply chain disruptions threaten production, technological exploitation undermines competitive advantages, and cyberespionage exposes companies to costly security and regulatory risks.
Corporate executives cannot control China’s actions, but they can anticipate these vulnerabilities and take reasonable steps to mitigate them. Shareholders should expect nothing less. Establishing committees specifically tasked with overseeing China-related risks would be a best practice for corporations seeking to mitigate foreign influence in American companies. Management should be screened for relationships with entities or individuals linked to the CCP.
For American corporations, the consequences of Chinese cyberespionage, AI exploitation, and hostage supply chains extend far beyond national security. They threaten corporate profitability and ultimately diminish shareholder value.
The recent story about Nvidia and Jensen Huang is a painful reminder that whom corporations get in bed with, literally and figuratively, directly impacts American investors.