Nvidia may still have Morgan Stanley's vote of confidence, but it is no longer among the investment bank's top stock picks. The bank has removed the artificial intelligence chipmaker from its list of preferred stocks while retaining its Overweight rating, according to a Bloomberg report.

While Morgan Stanley has not turned bearish on Nvidia, the change comes at a time when the company is dealing with an extraordinary crisis around its chief executive, Jensen Huang, with questions emerging over corporate governance, national security and the future of its leadership.

The controversy centres on allegations that Huang had a relationship with a Chinese businesswoman, Alice Huang, suspected of having links to Beijing's intelligence network. Nvidia's board has initiated an independent investigation into the matter, as scrutiny of the company's leadership intensifies.

Huang has acknowledged being unfaithful to his wife in a message to employees and said he would cooperate with the investigation. The allegations have also prompted concerns over whether the relationship could have exposed the company to foreign intelligence operations or compromised sensitive information.

Nvidia has said its board has no reason to believe that national security or company secrets were compromised. However, the episode has brought an unusual layer of uncertainty to a company whose fortunes have been closely tied to Huang's leadership and public persona.

The market reaction has been swift. Nvidia lost around $430 billion in market value over two trading sessions, as per Reuters, as the controversy rattled investors. The stock was already facing pressure from concerns over the sustainability of artificial intelligence spending and the returns expected from the hundreds of billions of dollars being committed to data centres.

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