Nvidia's CEO is out after a sex scandal tied to an alleged Chinese spy, and it's bad news for the company and the broader AI trade.

• Jensen Huang was removed as CEO and from the board after admitting to an affair with a woman U.S. intelligence believes is a Chinese spy, then a second affair with a subordinate executive surfaced.
• Nvidia stock dropped sharply in premarket trading, wiping out roughly $420 billion in value; the stock is down over 20% in the past month.
• CFO Colette Kress is stepping in as replacement, while Trump publicly pushed for Apple's Tim Cook to take over instead.
• Shareholders have filed a class-action lawsuit, claiming Nvidia's denials about the affair and alleged illegal chip sales to China may have kept the stock price artificially high.
• The scandal raises bigger questions about ties between Nvidia, the Trump administration, and China, including a $25 million Nvidia donation tied to the White House and reports that officials knew about the spy allegations for nearly a year before acting.

Outlook: Expect congressional hearings, more fallout for officials who knew and sat on the information, and continued pressure on Nvidia's stock as the AI investment bubble looks increasingly shaky.