Unable to withstand a series of scandals: Jensen Huang steps down from Nvidia!

Nvidia announced on Thursday that Jensen Huang is stepping down as CEO with immediate effect. The man who co-founded the company in 1993 and transformed it from a manufacturer of graphics chips for gamers into a key hardware supplier for artificial intelligence, is not just leaving management. He is also leaving the board of directors, after two weeks of scandals that quickly escalated from a private matter to national security concerns.

CFO takes the helm

Nvidia will be temporarily led by Colette Kress, who has served as the company’s CFO since 2013 and will retain this position during the transitional period. The board of directors will select a permanent successor from both internal and external candidates. Harvey C. Jones, a current board member and former head of Synopsys, has become the Chairman of the Board. Nvidia had not previously had a Chairman of the Board, which clearly illustrates how much power was concentrated in the hands of a single individual.

The first major test will come on Tuesday, November 17, when Nvidia announces its third fiscal quarter results. Although Huang is stepping down from leadership, he still holds approximately 3.6% of the company’s shares and is its fourth-largest investor.

From admitted infidelity to resignation in four days

Over the past two weeks, The New York Times published a series of articles about Huang’s relationship with Alice Huang, a former manager at the Singaporean cloud company Megaspeed. Despite sharing the same surname, they are not related. Megaspeed was among the partners with preferential access to Nvidia chips, and Washington was investigating the company on suspicion of helping China acquire chips whose export is restricted. According to these reports, US authorities concluded that Alice Huang collaborated with Chinese intelligence. Beijing denies this. Singapore stated that it had never investigated her itself, but the investigation into Megaspeed is still ongoing, according to its Ministry of Home Affairs.

On November 8, Huang admitted to infidelity towards his wife in a letter to employees. The board of directors then launched an independent investigation with external lawyers, but at the same time expressed confidence in him and stated that there was no reason to believe that company secrets or US national security were compromised. The turning point came on Wednesday with reports of another extramarital affair – this time with a high-ranking Nvidia manager who reported directly to him. According to a Reuters source, the board met that same day to discuss his dismissal. A day later, Nvidia announced his departure.

The face of the entire AI boom departs

The market reacted immediately. Nvidia shares plummeted by more than 10% in pre-market trading, dragging down the rest of the stock market. The company, valued at around $4 trillion, was not in good shape even before this: since January, it had lost 6.9%, while the S&P 500 index gained 11.3%. The blame lies with increasing competition and doubts about how long the current pace of AI investments will last.

Huang was not just a CEO, but the main voice of the entire industry. He invested Nvidia’s money in cloud providers, suppliers, and large AI laboratories, helping to build an entire ecosystem that relies on Nvidia. Thanks to close ties with Donald Trump, he also advocated in Washington for Nvidia to continue selling chips to China. Just on Sunday, the US President said he had done an amazing job for the country. His departure could therefore also impact US chip export policy. Nvidia does not have a clear successor – analysts had already pointed out the lack of a succession plan in recent days.

GeForce card owners are unlikely to be affected by the change in the near future. Product plans in a company of this size are prepared years in advance, so what will appear in stores next year has long been decided. A more interesting question is how much attention the new company leadership will dedicate to gamers.

Will Nvidia maintain its lead in AI even without Jensen Huang?

Source: Reuters, CNN, Fox Business, NVIDIA