Jensen Huang Resigns: Nvidia Shares Tumble Even Further A…

Update: Thursday, 9:15 a.m. ET:

Jensen Huang has resigned as president and CEO of Nvidia, the company’s board of directors announced on Thursday.

The move caps a dramatic week for one of the most influential titans of tech, who had become embroiled in scandals surrounding two extramarital affairs, one with an alleged spy and another with a subordinate.

Huang’s resignation is effective immediately. He is also stepping down from the company’s board.

Colette Kress, who is currently Nvidia’s EVP and CFO, has agreed to serve as Interim CEO until a permanent replacement can be found, Nvidia said.

The company’s lack of a cohesive succession plan has caused concern among analysts and investors a.

Premarket s of Nvidia Corp. (Nasdaq: NVDA) were already falling on Thursday morning as investors digested reports from the night before about a potential ouster of Huang.

ing the news of Huang’s immediate departure, the stock fell even further.

As of this writing, the stock is down almost 13% in premarket trading. That’s in addition to an 11.33% decline over the last five trading sessions.

This story is developing…

Original story appears below:

s of Nvidia Corporation (Nasdaq: NVDA) are once again sinking in premarket trading this morning after reports yesterday that the company’s board has convened to discuss whether to oust its embattled cofounder and CEO, Jensen Huang.

As of this writing, NVDA s are down more than 7% in premarket trading, mainly due to uncertainty over Huang’s fate.

But several Wall Street analysts worry that Nvidia’s lack of a known succession plan could weigh on the stock’s price for a long time. Here’s what you need to know.

What’s happened?

This week started out badly for Nvidia, and yesterday things got worse.

On Sunday, CEO Jensen Huang admitted to an extramarital affair with a woman whom U.S. intelligence officials believe could be a Chinese spy. That raised severe national security concerns and led to a steep sell-off in NVDA stock.

However, at the time, Nvidia’s board released a statement saying it still had “confidence in Jensen and his leadership team.”

In other words: it was a scandal, but the board backed its CEO (and said it had no reason to believe its secrets or national security were compromised).

But things got worse yesterday.

That’s when The Wall Street Journal revealed that Nvidia’s board was meeting to determine whether to oust Huang. What changed? News broke of an alleged second affair that Huang had had, this time with a subordinate who works at Nvidia.

At this time, Huang’s fate remains unknown. But it’s precisely that uncertainty—and what comes next if he is ousted—that has Wall Street fearing for NVDA stock.

Nvidia has no publicly known succession plan

One of the greatest periods of anxiety and uncertainty for employees and investors is when a company changes leadership. 

If the old leader was good, can the new one measure up? Will the new leader change tack? Will the bottom line be impacted? Will the corporate environment change? What about employee morale and productivity?

Leadership changes often bring these kinds of questions, even in ideal situations, when a CEO change has been telegraphed long in advance (as was done with Apple’s CEO transition earlier this year).

But when a CEO change happens on short notice, especially when a scandal is driving it—and the company has no known succession plans in place—that really freaks investors out.

And that’s exactly why Nvidia stock is falling so much this morning.

The company has no known succession plans for who will take over when Huang leaves the CEO role. That only adds to the uncertainty now. It’s not only: Will he be fired? It’s: Who can successfully run one of the world’s most valuable and economically important companies if Huang is ousted?

Who can replace Huang as Nvidia CEO?

It should be noted that Nvidia may have a secret succession plan in place that the company has never publicly disclosed. But if it did, the board would ly have acknowledged the plan—or at least its existence—given the uncertainty of Huang’s fate.

Regardless of whether a plan is in place, if Huang were to be ousted, Nvidia has two options for replacing him: find a new CEO from within Nvidia, or look outside. 

It’s impossible to predict which external person the company would select as the new CEO, but someone with a deep understanding of AI or chip design would be ly. 

If Nvidia looks inside, there are some obvious candidates, based on their positions at the company:

• Colette Kress: the company’s chief financial officer.
• Ian Buck: VP of Hyperscale and High-Performance Computing
• Michael Kagan: the company’s chief technology officer

CNBC reports that Citi analysts Atif Malik and Papa Sylla think Kress is a ly interim option while Nvidia searches for a permanent successor.

Morningstar says that if Nvidia recruits internally, Buck “strikes us as a logical successor to Jensen Huang” and “is well known to outside investors.”

But the fact of the matter is, for now, no one knows who would replace Huang.

Nvidia stock turns negative for the year

All this uncertainty is weighing on NVDA stock. As of this writing, Nvidia s are down nearly 7.5% in premarket trading, bringing their five-day loss to over 13%—a staggering amount for a company that many see as the backbone of the AI economy.

Many investors fear worse times for NVDA ahead because of the scandal. The company is already being sued by holders, and a series of congressional investigations is ly.

Then the ever-present question remains: Who leads Nvidia if its visionary CEO is forced out?

“Right now, Nvidia doesn’t have [a Tim Cook to Steve Jobs-type] person in place, so it’s going to be a choice of keeping Jensen and being faced with . . . all kinds of interrogations, or they’re going to have to move on from him,” Questar Capital Partners’ Richard Reyle noted to CNBC, “and that’s just going to make the stock uninvestable.”

Uninvestable or not, the company’s price has fallen more than 33% since its all-time high above $239 in early October, when Nvidia was valued at more than $5.7 trillion—the most valuable public company in history. 

Today, post-Huang scandal, the company’s valuation is down to less than $4.2 trillion.

(Disclosure: Morningstar is owned by Joe Mansueto, owner of Fast Company parent Mansueto Ventures.)