US President Donald Trump said on Monday that the FBI was investigating Nvidia chief executive Jensen Huang's relationship with a Chinese businesswoman alleged to be a spy for Beijing.

Trump said he was “amazed” by the allegations involving Huang, one of his closest allies in Silicon Valley. He said he had spoken to the chief executive, who told him he had no idea the woman was a spy.

“I know the FBI is looking into it,” Trump said. “I think that he’ll be in good shape,” he added.

Nvidia shares closed down more than 4 percent on Monday after the company's board launched an internal investigation into whether Huang had been targeted by a foreign intelligence operation.

The investigation, announced on Sunday, has cast a spotlight on the future of 63-year-old Huang, given Nvidia's position as the world's most valuable chipmaker and his central role in the artificial intelligence boom.

Huang told Nvidia employees that he had been unfaithful to his wife, without disclosing details of the relationship.

Known for his trademark leather jacket, Huang enjoys rock-star status worldwide, particularly in Asia, where he frequently mingles with fans, taking selfies and signing autographs.

He is Nvidia's fifth-largest shareholder, with a stake of about 3.6 percent, according to LSEG data. He also maintains a tight grip on the company through an unusually flat management structure in which dozens of executives report directly to him.

Unlike Meta Platforms, led by Mark Zuckerberg, or Elon Musk's SpaceX, Nvidia does not have a dual-class share structure that would give co-founder Huang majority voting control.

The New York Times reported that Trump had been briefed on Huang's relationship with the woman and that she was passing information to the Chinese government, but the president had chosen not to act on the information.

“The so-called Chinese spy narrative is purely a groundless accusation, slander, and a smear,” Chinese Foreign Ministry spokesperson Guo Jiakun told reporters in Beijing.

Huang's relationship with Trump has coincided with several favourable policy developments for Nvidia. The president has repeatedly praised the chief executive and awarded him the nation's highest honour for scientific achievement in October.

On the same day, Trump disclosed that he had bought up to $1.6 million worth of Nvidia shares and sold up to $1 million worth during the summer.

‘Not an ordinary CEO’

Nvidia said its board had confidence in Huang, widely regarded on Wall Street as the most important figure underpinning the artificial intelligence investment boom.

Analysts acknowledged uncertainty over succession but said they did not expect the investigation to prompt the longtime chief executive to step down.

“Nvidia is not an ordinary company and Jensen is not an ordinary CEO; he is Nvidia, clearly sets the long-term strategy and direction, and pulls most of the company's strings himself,” said Stacy Rasgon, an analyst at Bernstein.

Nvidia shareholders filed a proposed class-action lawsuit against Huang and the company on Monday, accusing them of defrauding investors by concealing Huang's ties to a suspected Chinese spy.

Lawmakers and advocates told Reuters that the controversy could strengthen congressional support for legislation restricting China's access to artificial intelligence chips.

US House Democratic leader Hakeem Jeffries said on Monday that Congress needed more answers. He also called for the House to pass an annual defence bill that includes restrictions on chip sales to China.

The New York Times reported last month that Huang had a relationship with Alice Huang, a former executive of Singapore-based company Megaspeed who is not related to him. US authorities investigated her and concluded that she was an asset of Chinese intelligence.

Megaspeed did not immediately respond to a request for comment on Monday, a public holiday in Singapore.

Alice Huang did not respond to the New York Times when it first reported the relationship last month. Reuters could not establish her whereabouts to seek comment on Monday.