Nvidia Leadership Crisis
Nvidia (NVDA) shares are falling hard on news that CEO and co-founder Jensen Huang may be forced out. The Wall Street Journal reports the board is preparing to remove him over two affairs. The more damaging one involves Alice Huang, an executive at Singapore-based Mega Speed, an Nvidia customer. She is alleged to be a spy for China. The first scandal hit the market on Sunday.
After the market closed, the New York Times reported a second affair, this one with Nvidia's VP of healthcare, a senior executive inside the company. Asked for comment, Jensen Huang said it was probably best not to talk. Reuters could not verify the report. Shares fell about 8.7% on the news.
This is a confidence crisis for a company that was recently the world's most valuable. The stock is breaking below key support between 160 and 165. It is trading around 159.15. Analysts who once put NVDA on every buy list are now moving to the sidelines, which is unusual for the stock.
The Board and Succession
Nvidia's board met in the evening to discuss whether to remove Jensen Huang. No decision has been made, and no press release has come from Nvidia or the board. The market is now asking who takes over, either as interim or long-term CEO.
Colette Kress, the CFO heard on quarterly conference calls, is widely expected to be named interim leader if Huang is removed. Another candidate is Ian Buck, head of product and hyperscale AI, who led the way on the CUDA architecture. He could also take over in the near term until a permanent successor is found.
The board will need time to finish its internal investigation into the first matter. The second matter likely triggers another investigation, since the affair was with a subordinate of Huang. That brings human resources problems, plus messaging challenges both internally to employees and externally.
The AI Trade and AMD
The AI story is not destroyed by this. Demand for chips stays huge, and Nvidia remains the heavyweight and the best performer on the products it offers. The market should not expect demand for Nvidia's chips to fall off because of the scandal. Companies still trying to make money in AI will buy the best products to make their AI models as efficient as possible, and Nvidia owns that space now.
One open question: does the 2028 backlog of orders start to slow a little? That is where any softening might show.
Competitors are benefiting. AMD has moved aggressively higher. It is up over 20% in the last three trading sessions and up over 39% since Wednesday of last week, gaining on these headlines. Whether that holds depends on the fundamentals. Bank of America raised its AMD price target to 700 from 650 with a buy rating. William Blair upgraded AMD to outperform.
The AI theme stays strong and intact. What may be happening is a rotation in near-term leadership of stock performance, away from Nvidia and toward names like AMD.
