The blast radius from Jensen Huang's resignation as chief executive of Nvidia has expanded to rain fallout on technology companies in China, including Alibaba Group Holding, Tencent Holdings, and other AI-related companies.

Huang stepped down Thursday after an extramarital affair with an Nvidia employee was reported soon after he admitted to having an affair with a woman the U.S. suspects was working for Chinese intelligence.

Nvidia stock was down 5.6% Thursday afternoon, but there was also some apparent fallout from the saga. Alibaba shares dropped nearly 7% to $94.67 and Tencent fell 2.6% overnight in Hong Kong to HK$398, while the KraneShares CSI China Internet exchange-traded fund fell 3% to $22.91.

It isn't time to go bargain-hunting yet, as pressure is likely to intensify further on Chinese artificial-intelligence-related stocks, especially Alibaba and other go-to stocks for foreign investors.

One big reason is the political fallout from the Huang's relationship with Alice Huang, an executive at Megaspeed International. The Singapore-based cloud-computing company bought billions of Nvidia chips, raising concerns that it gave Chinese AI companies access to advanced Nvidia chips.

The national security hawks who have been sidelined for much of the second Trump administration now have momentum from both the Huang revelations and the Democrats' midterm landslide victory, which was made possible in part by opposition to the AI-buildout.

If it sounds like a jumble, it is -- and it's still evolving. But one thing is clear: "This whole incident is going to inject fresh momentum in this push for tighter export controls," says Laila Khajawa, director of Gavekal Technologies, who sees an increased push for bills like the Remote Access Security Act, cosponsored by Sens. Dave McCormick (R., Pa.) and Ron Wyden (D., Ore.).

Export bans that are currently in place prohibit unfriendly regimes such as China from acquiring sensitive technologies, but they don't apply to remote access to those technologies via cloud services. The McCormick-Wyden bill aims to close that loophole. Chinese companies have been trying to tap that advanced computing capabilities to train their AI models because their own chips are not advanced enough, Khawaja says.

The Institute of Progress estimates that remote access accounts for almost a quarter of China's cumulative computing power this year and would account for a third next year, and closing the loophole would be a significant setback for all Chinese companies, Khawaja adds.

Alibaba, one of China's most prominent companies, is likely to feel the blowback. The selling pressure comes as Chinese tech stocks are in a bear market. Some AI-related companies haven't seen the earnings growth the market had anticipated and questions loom about how AI will be monetized.

"We have reached a point where investors are no longer willing to write off any potential bad news and keep piling in," says Philip Wool, deputy chief investment officer and co-manager of several China-oriented strategies at Rayliant Advisors. "Clearly, Nvidia is in for rough days ahead trying to unwind Jensen's role there and that is just more bad news to fuel the bear argument."

When the dust settles, Wool expects a bargain-hunting opportunity for longer-term investors in companies that will be the users of AI. He puts Alibaba and Tencent in that bucket, since they generate massive cash flows and have core businesses with billions of users.

If the U.S. ramps up restrictions, Chinese hardware companies working to make China much more self-sufficient could benefit. That would include chip companies such as Cambricon Technologies, GigaDevice Semiconductor, and Hua Hong Grace Semiconductor, one of China's biggest contract chip makers, Wool says.

For now, investors might want to wait on the sidelines and watch the drama play out.