Nvidia said Thursday that Jensen Huang is exiting the CEO role and his board seat with immediate effect. According to the company, Colette Kress, the Chief Financial Officer, has been appointed interim CEO, and Harvey C. Jones, former Synopsys CEO, was designated as the board's first-ever chair.
The move followed Huang's admission on Sunday that he had an affair. According to the Financial Times, he had a romantic relationship with Alice Huang, an executive at the cloud provider Megaspeed; U.S. intelligence officials consider her to be a spy for China. The New York Times reported Wednesday that Huang also had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reports to him.
The stock slid on the headlines. By 9:14 a.m. ET, shares were down 11.9% in premarket trading. A market display also showed an After Hours last price of 150.74 at 9:26 AM EST, a decline of 22.99 or 13.23% from a prior close of 173.73.
Before the resignation, several Wall Street analysts told CNBC the stock could drop 20% if Huang left, given his role in Nvidia's rise. The shares are already down more than 20% in the past month. Bernstein on Thursday cut its price target by half, to 200 from 400.
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Stacy Rasgon, senior analyst at Bernstein, said on CNBC's Squawk Box Asia that the alleged affair with a direct report makes it "much tougher for the board to leave him in position." He added, "Jensen is Nvidia, right? He is the visionary. The reason they're in the position that they're in today is because he made decisions 10 years ago," and asked, "Who is the right person now to make the decisions for the next 10 years? I don't intuitively know who that person would be."
Prior to that, members of Congress urged Huang to step down, intensifying the pressure. In an interview with CNBC's Access Middle East, Questar Capital Partners' chief investment officer, Richard Reyle, called the stock "uninvestable," because there is no succession plan, arguing Nvidia must either keep Huang and face "months and months" of inquiries or "move on from him," which "doesn't make the AI trade uninvestable, but it certainly makes Nvidia uninvestable."
Huang co-founded Nvidia in 1993 and helped shift it from gaming hardware to the center of the AI boom. That history is why investors are laser focused on succession, the interim setup under Kress, and how quickly the board identifies a long term leader. Add headline risk from the reported relationships and a major target cut from Bernstein, and the stock's risk profile looks very different than a month ago.
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