Key Takeaways
- Nvidia shares fell 5.5% on Tuesday as the scandal around CEO Jensen Huang widened to Megaspeed, a Singapore chip buyer under US investigation.
- Short seller Culper Research found Alibaba’s Singapore unit reported over $4.1 billion in prepayments after Megaspeed’s Malaysian arm pledged its business to it.
- If Alibaba is Megaspeed’s largest client, as the FT reports, its cloud capacity is at risk, and its Nov. 19 results are the next check.
Most of this week’s coverage of Nvidia (NVDA) has been about Jensen Huang’s private life. The stock closed Wednesday 6.9% below its Nov. 6 close, then sank in after-hours trading on reports of a second affair and a Wall Street Journal report that the board is preparing to oust him. Follow Megaspeed’s money, though, and you reach Alibaba (BABA), whose AI cloud grew 45% last quarter.
The Scandal Runs Through Megaspeed
On Nov. 8, Huang admitted an affair, reportedly with Alice Huang, a former Megaspeed executive US intelligence concluded was passing information to Beijing, per The New York Times. On Tuesday, The Information said the relationship may have helped move at least $7.5 billion of Nvidia chips to Chinese companies over several years. Nvidia fell 5.5% to $168.89, after a 4.3% drop Monday. It rose 2.9% on Wednesday before the Times reported that Huang is also suspected of an affair with Nvidia executive Kimberly Powell.
Bloomberg reported that Nvidia general counsel Tim Teter called Commerce Under Secretary Jeffrey Kessler, who oversees chip export curbs, in late summer 2025, after which Megaspeed investigators had to route Nvidia requests through Kessler. The Justice Department later had Commerce pause, the Times reported. (Nvidia says Teter didn’t know about the affair.)
Alibaba Sits on Both Sides of Megaspeed
In a May 13 report, Culper said Malaysian filings show Speedmatrix, Megaspeed’s Malaysian subsidiary, pledged its entire business in June 2024 to Apex Enterprise Solutions, a Singapore company whose parent is Alibaba. As of March 31, 2025, Apex reported over $4.1 billion in prepayments against $4.2 billion in loans payable to Alibaba.
The Financial Times reported Monday that Alibaba was the founding anchor customer for Megaspeed’s Southeast Asian cloud and remains its largest client, and that Apex lent Speedmatrix money in June 2024. That makes Alibaba Megaspeed’s lender and biggest tenant, if both reports hold.
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Nvidia’s Cushion vs. Alibaba’s Capacity Risk
Nvidia’s quarterly revenue more than doubled over the six quarters to July 26, 2026, to $96.2 billion:
The Information’s $7.5 billion, spread over years, is under a tenth of that quarter. Culper’s claim that China drove over 20% of fiscal 2026 compute revenue is unconfirmed. Nvidia’s guidance already assumes no China data-center compute revenue, so its risk is governance plus tighter export curbs, which lawmakers are now weighing.
Alibaba’s cloud is capped by chips. AI Cloud and Compute Services revenue rose 45% to RMB 48.4 billion in the June 2026 quarter, and management expects demand to keep outstripping supply. Chinese buyers including Alibaba expect only about 1% of roughly 6 million RTX Pro 5500 chips they’ve ordered over the next four months.
Capex rose from RMB 32.1 billion in fiscal 2024 to RMB 126.1 billion in fiscal 2026 (years ended March), then hit RMB 67.7 billion in the June quarter alone, up 75%:
Free cash flow was an outflow of RMB 44.7 billion, versus RMB 18.8 billion a year earlier. Replacing compute Alibaba reportedly rents from Megaspeed would be costly and slow.
Why Alibaba’s Nov. 19 Report Matters
No filing shows Apex’s prepayments reached Megaspeed; Culper inferred it, and Culper is short Nvidia. Megaspeed denies diverting chips, and the US probe targets it, not Alibaba.
Still, Alibaba holders face a capacity risk the Huang headlines miss: curbs on Megaspeed’s operations or chip supply could crimp Alibaba’s access to compute while the group runs negative free cash flow. On Nov. 19, watch cloud growth and anything management says about capacity outside China.
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
