Ousting Nvidia boss Jensen Huang over the Chinese "honeypot" scandal could wipe $1tn (£750bn) off the company's value, analysts have warned.
The tech giant, which supplies microchips fuelling the AI boom, could see its shares crash by up to one third if the billionaire chief executive resigns or is forced out of the group.
Mr Huang, 63, is seen by Wall Street as critical to Nvidia's success, having turned a small graphics processor company into a titan of the AI industry.
However, he is now under investigation after admitting to having had an affair with Alice Huang, an alleged Chinese spy.
Analysts have warned that the scandal had raised the once "unthinkable" prospect that Mr Huang could be ousted from the company he founded three decades ago.
Egor Tolmachev, an analyst at Freedom Broker, said shares could fall up to 30pc if Huang departs.
Dan Ives, an analyst at Yorkville Ives, said: "We believe if Jensen was removed as CEO, Nvidia is worth a lot less – 25pc to 30pc."
Nvidia's stock dropped a further 6.7pc on Tuesday and has fallen more than 11pc since Monday, making it worth $4tn.
The decline means Microsoft has now overtaken Nvidia to become the world's second most valuable company, after Apple.
Nvidia has said it does not believe national security or the company's secrets were put at risk by the affair.
Gene Munster, the managing partner at Deepwater Management, which previously held a stake in Nvidia, said: "If Jensen had to leave, what would happen to the stock? Our general sense is probably down around 20pc."
Richard Windsor, an independent analyst, said the potential downside from the loss of Mr Huang would be "25pc tops".
Mr Windsor said: "For many years, the idea that Jensen Huang could be forced out of Nvidia was unthinkable ... With recent events, this is no longer a remote possibility."
Doubts over Mr Huang's role at Nvidia have added to broader fears over the future of the AI investment boom.
Nvidia's chips are critical for powering services from OpenAI and Anthropic, while the company has backstopped tens of billions of dollars in investment.
Nvidia was also sued by investors on Monday over claims it had lied about the affair before Mr Huang's admission on Sunday.
Rosen, a US law firm, launched a class-action shareholder lawsuit accusing Nvidia of making "false and misleading" statements about Mr Huang's relationship.
Nvidia denied the allegations when The New York Times reported last month that Donald Trump had been briefed on security reports that someone with direct access to the Nvidia boss was working for Beijing.
Members of the company's board have since confirmed that they have hired law firm Wachtell, Lipton, Rosen & Katz to conduct a "thorough and independent investigation" into Mr Huang's conduct.
An Nvidia spokesman said at the time: "Jensen's interactions with Ms Huang are not unusual or unexpected."
Ms Huang, who is not related to the Nvidia chief, was a senior executive at Megaspeed, a Singaporean technology business and a Nvidia customer. The company is suspected of helping Beijing to gain access to advanced AI chips that the US has banned from being exported to China.
While Rosen did not name Ms Huang, it said the affair was with someone at Megaspeed, "a company suspected of assisting China in circumventing export controls".
The law firm added: "Nvidia's statements about its relationship with Megaspeed were materially false and misleading at all relevant times.
"The foregoing raised concerns in the national security community about Nvidia and, if revealed, presented a material risk to the company's reputation and business prospects."
Mr Trump claimed on Monday that the FBI was "looking into" Mr Huang , but said he stood by the embattled tech boss.
The US president defended Mr Huang as an "honourable" man, saying: "I asked him that question, 'Did you have any idea that she was a spy?' He said, 'I had no idea that she was a spy,' and I really believe him."
The Nvidia chief has enjoyed intimate access to Mr Trump, while also being a vocal opponent of US export rules that block sales of cutting edge chips to China.
Mr Huang said at the weekend: "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry."
The company has been contacted for comment.
