Nvidia shares fell more than 8% in after-hours trading on Wednesday after reports that the board would discuss the future of chief executive Jensen Huang. No decision has been announced. The board has said it has confidence in Huang, and he remains CEO.
The slide came after a regular session in which the stock rose 2.9%. The after-hours fall wiped out nearly $350 billion in market value, according to reports. Nvidia is valued at about $4.2 trillion.
How the board got here
The board announced on Sunday, November 8, that an independent committee of directors, advised by outside counsel, would investigate reports that Huang was the target of a foreign intelligence effort.
The statement said the board has “no reason to believe” national security or Nvidia’s secrets were compromised, and that Huang had committed to cooperate. Nvidia’s operations will continue without interruption, spokesperson John Rizzo said.
The investigation follows US media reporting on October 29. It said US intelligence officials believed a Chinese executive at Singapore-based data-centre firm Megaspeed was passing information to Beijing.
Those intelligence findings have not been confirmed by the US government, and China’s foreign ministry has called the claims groundless. Megaspeed bought more than $4.8 billion in Nvidia chips over two years, the reports said. Huang has called his contacts with the company normal.
What Huang has confirmed is personal. In a memo to staff on Sunday, he said he had been unfaithful to his wife and apologised to his family and colleagues. He did not address the intelligence allegations.
The market and the politics
Nvidia fell 4.5% in premarket trading on Monday and dropped as much as 8% during the session. Chris Weston of Pepperstone said he did not expect Huang to resign, but warned that a perceived imminent exit could cause an “absolute bloodbath” in the stock.
Washington has taken notice. President Donald Trump called Huang “an honorable guy” and said he had not discussed the matter with him. Three House Republican committee chairs have asked Huang to attend a closed-door briefing on November 18, and Democratic Senator Chris Coons has said Congress would investigate. Nvidia reports quarterly results on November 17, a day before that briefing.
Why a possible exit worries investors
Huang, 63, co-founded Nvidia in 1993. Analysts describe a company built around him. “Jensen is Nvidia,” Jay Goldberg of Seaport Research Partners said. Dan Ives of Yorkville Ives & Co. called him the company’s “hearts and lungs.” In a client note, he valued the stock at $300 a share with Huang and $225 without him, about 25% lower. He also wrote: “There is clearly risk that Jensen could be removed as CEO depending on the Board investigation.”
Nvidia has no public succession plan and no obvious heir. The board has not decided Huang’s future, and options reportedly under discussion include an interim chief executive or a co-CEO arrangement. Neither is a decision.
Huang holds about 870 million Nvidia shares, a little over 3.5% of the company. There is no report that he plans to sell.
A leadership change would not necessarily disrupt products right away, since Nvidia’s chip roadmap is already set. Longer-term strategy would fall to a new management team.
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