EN
Bessent Pins $4.8 Billion Megaspeed Debacle on Lutnick and Puts Nvidia on Notice
Treasury Secretary Scott Bessent made a striking public break with a Cabinet colleague on Friday morning, using a television appearance to shift blame for the Megaspeed debacle onto Commerce Secretary Howard Lutnick while also pressing Nvidia (NVDA) on whether it properly vetted customers that appear to be pass-through shell companies.
Bessent said Treasury, the Pentagon, the State Department and the U.S. Trade Representative had all favored adding the Singapore-based Nvidia customer to the entity list (the Commerce Department's export blacklist) for quite a while, but stressed that Commerce's Bureau of Industry and Security alone controls that decision.
"Treasury, War, USTR, and State, they were in favor of putting Megaspeed on the entity list for months," Bessent explained on CNBC. "But Commerce has the pen. Commerce BIS has the pen, and you will have to ask them about their internal processes."
Bessent did not deny reports of a tense Situation Room clash with Lutnick on November 5, but he declined to describe it, leaving the most dramatic chapter of the feud unaddressed.
A Cabinet Feud With Awkward Timing
The remarks land at an especially damaging moment, as senior White House advisers are reportedly discussing whether Lutnick should be pushed out, even though the White House reaffirmed President Trump's full confidence in him as recently as Thursday.
Bessent also suggested that Commerce's inaction ran counter to Trump's directive limiting China's access to advanced Nvidia chips. Separate reporting from The New York Times alleges that Lutnick stalled presidentially approved crackdowns at least three times this year, citing fears of a trade war with Beijing.
Still, the White House's official line on Thursday was full confidence in Lutnick, so Bessent's account is, for now, one side of an internal dispute rather than a settled verdict.
The $4.8 Billion Question
Megaspeed, which has been linked to suspected Chinese intelligence asset Alice Huang, bought roughly $4.8 billion in Nvidia-powered equipment since mid-2024.
Bessent's framing turns that purchase tally into a political liability for Commerce, since he says four agencies wanted Megaspeed listed for months before any action was taken.
In a notable but underappreciated detail, the entity list has had no additions since October 2025, the longest gap in more than a decade.
Is NVDA Next in the Hot Seat?
For investors, the bigger shift may be Bessent's questioning of Nvidia's customer vetting, which raises the prospect of accountability extending beyond Washington to the chipmaker itself. That question moves the debate from whether regulators acted fast enough to whether Nvidia should have caught the red flags around pass-through buyers sooner.
Nvidia has shed nearly $500 billion in market value since November 6, a steep drawdown heading into Tuesday's earnings report, which will be the first under interim CEO Colette Kress.
Because Nvidia's guidance already excludes China data center revenue, the direct earnings hit from tighter export enforcement looks contained. However, leadership uncertainty and a broader crackdown on Southeast Asian intermediaries remain the key risks to watch.
The Next Catalyst to Watch
Lutnick has agreed to testify before the Senate Banking Committee on December 10, setting up a high-profile hearing shortly after Nvidia reports.
The hearing will give Lutnick a formal forum to respond to Bessent's account, including the November 5 Situation Room clash that Bessent declined to describe. Scrutiny is set to intensify further in January, when Democrats taking committee gavels have promised tougher oversight.
For a chipmaker that has already lost nearly half a trillion dollars in value, the irony is that Washington's enforcement fight may end up mattering more to Nvidia's stock than the China revenue it has already removed from its forecast.
This article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever.
On the date of publication, Sarah Holzmann did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.