Nvidia is facing a new shareholder lawsuit and fresh scrutiny over the Chinese spying scandal, which is bad press but probably not a major financial threat to the company.

• A class-action lawsuit claims Nvidia misled investors about its ties to Mega Speed, a company linked to an alleged Chinese spy who bragged about having a personal relationship with CEO Jensen Huang.
• There are also questions about whether the Commerce Department quietly dropped its own investigation into the same company after Nvidia's top lawyer reached out, raising conflict-of-interest concerns tied to Commerce Secretary Howard Lutnick's family hedge fund.
• Nvidia's stock has dropped sharply on the news, but similar securities lawsuits historically settle for modest amounts compared to a company this size, and the legal bar to prove Nvidia knowingly broke export rules is high.
• Wall Street still expects huge revenue and profit growth next quarter, and most analysts still see the stock as deeply undervalued even after the scandal.
• Jensen Huang stepping down looks unlikely in the near term, since he's seen as central to the AI boom and the government has shown little appetite to push him out.

Outlook: Nvidia's earnings report next week will be the next big test, especially whether Huang addresses the controversy directly and whether the lawsuit leads to a settlement rather than a prolonged legal fight.