Six months after its initial May 13 report, short seller Culper Research is drawing renewed attention to its allegations concerning Nvidia Corp.'s exposure to China, despite U.S. trade restrictions. The report, which coincided with a 26.41% decline in Nvidia's stock, also surfaced questions about the relationship between former CEO Jensen Huang and an executive at a key intermediary.
Huang stepped down from his role on Thursday amid the controversy, with Chief Financial Officer Colette Kress appointed as interim CEO. The company has initiated a search for a permanent successor.
Allegations of Continued China Revenue and Diversion
Culper Research's 40-page report, citing investigations by Bloomberg and The New York Times alongside its own findings, challenges Nvidia's claims that its China business went to "zero" after April 2025 U.S. trade restrictions. The short seller asserts that over 20% of Nvidia's FY 2026 compute revenues were still driven by China, facilitated by illegal GPU diversion and Southeast Asian intermediaries.
A central figure in these allegations is Megaspeed International, which Nvidia has vouched for as "wholly owned and operated by a company based and headquartered outside China, with no China shareholders." However, Culper's uncovered documents suggest Megaspeed has been secretly financed by Alibaba, a Chinese multinational conglomerate, through a series of apparent shell companies.
The Megaspeed-Alibaba Connection
- Megaspeed's financial statements showed its balance sheet exploding from $33 million to $3.0 billion in total liabilities and equity between year-end 2023 and 2024, largely due to $2.9 billion in "refundable deposits received" from an unnamed source.
- Malaysian filings revealed that Speedmatrix, a Megaspeed operating subsidiary, pledged its entire business as collateral to Apex Enterprise Solutions (Singapore) in June 2024. Singapore filings indicate Apex's corporate parent is Alibaba.
- Trade records from December 2024 through January 2026 show Speedmatrix imported $4.6 billion in product, with $4.0 billion originating from Aivres Systems Inc., an Nvidia Elite OEM compute partner.
- Aivres Systems, formerly known as Inspur Systems Inc. (rebranded after its Chinese parent was placed on the U.S. entity list), remains one-third owned by the Chinese state. Culper suggests Aivres effectively functions as a China-dedicated supply channel.
Alleged Executive Ties and Espionage Claims
The report also highlighted an "uncomfortably close" relationship between former Nvidia CEO Jensen Huang and Alice Huang, an executive at Megaspeed International, whom the report referred to as a "suspected Chinese spy." While the espionage allegation remains unverified, the report details several instances of Jensen Huang being seen with Alice Huang and representatives from Alibaba at Megaspeed-linked data centers.
This situation echoes a March 2026 U.S. Department of Justice indictment of individuals tied to Supermicro Computer (SMCI) for allegedly smuggling $2.5 billion of Nvidia-powered servers into China via a Southeast Asian pass-through entity. Culper Research believes Megaspeed is affiliated with this network, suggesting a much larger, complex operation involving multiple Nvidia OEMs and intermediaries.
Market Impact and Future Outlook
Culper Research contends that analysts' view of China as potential upside for Nvidia is misguided. They argue that Beijing's late 2025 and early 2026 policies have blocked Nvidia imports in favor of domestic alternatives, leading to substantial declines in shipments and "very few orders" in China. This shift, according to Culper, presents "a huge blow to Nvidia financially."
It is important to note that Business Today has not independently verified the allegations made in Culper Research's report. The information presented here is based on the short seller's claims.