Nvidia scandal fails to bring down the tech bulls as spy investigation widens

Hello, this is Leonie Kidd with today’s edition of Morning Squawk.

Nvidia is dominating the headlines, but it’s not holding back the bulls. 

A solid rally across Wall Street, driven by some of the big chip names, came against a backdrop of serious concerns over the future of Jensen Huang’s leadership and what that means for the AI behemoth. 

But the devil remains in the details…

There are some key developments in the Nvidia scandal, as the AI giant could now face an FBI investigation into CEO Jensen Huang’s conduct.

President Donald Trump said during a press conference in the White House on Monday that he had spoken to Huang and that the CEO had denied knowing the woman he was having an affair with “was a spy” for China. “I know the FBI is looking into it,” Trump also said.

More key developments: 

• A Los Angeles law firm has filed a class action lawsuit representing shareholders against Nvidia and Huang in a federal court in San Jose, California. It accuses the defendants of making false or misleading statements that present a material risk to the company. 
• Lawyer Stephen Neal has emerged as a key figure in Nvidia’s internal investigation into Huang, as he has been named the board’s lead independent director.
• The lack of succession planning is concerning investors. CNBC has analyzed who reports to Huang directly and could step up if he is forced to step aside. 

Nvidia shares are trading higher premarket, up by around 1% after falling over 4% on Monday. 

• Cramer’s take: Jim Cramer says investors need to prepare for a “Jensen-less Nvidia,” adding that if Huang leaves, then “you can no longer be bound by our ‘own it, don’t trade it’ mantra, which has been the default view of the CNBC Investing Club.”

Chip stocks are mixed in premarket trading after that blistering rally on Monday. 

Broadcom and AMD led the biggest gains, alongside Magnificent 7 names like Amazon, Alphabet, Tesla and Microsoft.

Later today, neocloud group CoreWeave will publish earnings. CNBC’s Seema Mody will be watching to see whether there is an Nvidia impact, as one of the company’s largest shareholders has been hands-on in setting strategy.  

• Why it matters: The pressure is still on, with yields on some CoreWeave bonds maturing in 2031 jumping above 16%. The spread on its five-year credit default swaps, which are insurance against default, soared above 1,240 basis points, up 50% in the past month.

Nvidia sat out a rally on Wall Street that saw the S&P post its best session since April, the Dow add over 1,000 points and the Nasdaq jump 2%.  

Lower oil prices helped drive gains across major markets, with Brent and WTI continuing those declines this morning. Brent has dipped below $90 per barrel for the first time since August. 

Investors can watch out for a key inflation reading on Tuesday, when the October consumer price index report is released at 8:30 a.m. ET. 

Estimates show a headline growth rate of 0.3% and 0.2% for core. 

• Why it matters: Prices at the pump fell over 4%, according to the EIA in October, but Federal Reserve officials have warned that other price pressures may be harder to contain.
• Jobs surprise: October was surprisingly strong for job growth, and CNBC has investigated how AI could be adding roles, rather than removing them. For more on the 3 unexpected reasons why the jobs report surprised to the upside, head here.

A Republican representative has made the rare move to make an impeachment push against a member of his own party.

Rep. Thomas Massie, R-Ky, has introduced articles of impeachment against Defense Secretary Pete Hegseth, prompting a vote in the House of Representatives as early as this week.  

• Why it matters: President Trump said on Monday night he would stand by Hegseth even if he is impeached.
• What next?: Hegseth will hold a press conference later today from the Pentagon. His most recent press conference was on May 5.

FDA warns of vision loss risk linked to popular GLP-1 drugs

The U.S. Food and Drug Administration is requiring new safety warnings on all GLP-1 drugs after finding evidence of a potential increased risk of a rare eye condition, the agency said on Monday.

Nonarteritic anterior ischemic optic neuropathy (NAION), which can cause sudden vision loss, is rare, and a causal relationship has not been established. 

The FDA is requiring the makers of all GLP-1 medications to add a warning about the potential increased risk of NAION associated with use of these medications, it said.

— CNBC’s Dan Mangan, Laya Neelakandan, Annie Palmer, Jordan Novet, Jeff Cox, Alex Harring, Elsa Ohlen and Garrett Downs contributed to this report.

Jack Sommers and John Melloy edited this edition.