Nvidia Stock Plunges Over 7% as CEO Jensen Huang Resigns

Shares of NVIDIA fell over 7% on Thursday following news that Jensen Huang is resigning as the AI chipmaker’s president, CEO and board member. Huang’s exit comes as the executive has faced mounting scrutiny over two extramarital affairs, including one with a woman suspected of spying for China and another with a senior executive who reports to him. Colette Kress, who has served as the company’s chief financial officer since September 2013, will take over as interim CEO while the board launches a search for Huang’s permanent replacement. That search will consider both internal and external candidates. Kress has nearly 25 years of experience in finance roles at leading tech companies, including Cisco and Microsoft. “NVIDIA’s strength has always come from its people, and together with our leadership team, I am committed to building on the extraordinary foundation Jensen created over the last 33 years,” Kress said in a statement. “We will continue advancing the work that has made NVIDIA a leader in accelerated computing and AI, and execute on the opportunities ahead. Our focus remains on serving our customers, partners, developers and shareholders.” The leadership shakeup, which raises major questions about national security and the future of one of the world’s most valuable companies, comes days after Nvidia’s board publicly expressed confidence in Huang while launching an independent investigation into reports that he was targeted by a foreign intelligence operation. On Thursday, the board thanked Huang for his “immeasurable contributions” to the company and tech industry. It also expressed “full confidence” in Kress and the leadership team and said its operations, customer commitments and product roadmap would “continue without interruption.” “Colette has helped lead NVIDIA through a period of extraordinary growth and has a deep understanding of our business, customers, operations and financial position,” Nvidia board chair Harvey Jones added. As of Thursday morning, Nvidia stock was trading at $165.49 apiece and had a market cap of $3.99 trillion. Its shares are down 12% year to date and 25% in the past six months. Keith Fitz-Gerald, a private investor and the founder and principal analyst of the market research firm Fitz-Gerald Group, said that Nvidia faces two key challenges going forward: vision and shattered trust. “Jensen was Nvidia’s chief strategist, chief salesman and chief evangelist, all rolled into one leather jacket. Nobody inside the company has been groomed to fill that role,” he said. “What’s happening calls into question every last decision or comment he’s ever made about dang near anything and everything. Every product roadmap. Every demand forecast. Every assurance he gave Washington about China. Every motivational interview about running a company and managerial excellence. Confidence will have to be rebuilt one quarter at a time by Jensen’s successor.” However, he acknowledged that there are plenty of examples where companies have come back stronger with a new leader, including several where the old one left “under a cloud,” such as McDonald’s, Uber, Chipotle, Disney, Microsoft, AMD and IBM. “Each board found the right successor then gave that person room to run,” Fitz-Gerald added. “Nvidia’s board has yet to do either, but I think odds are very good that they will.” Nvidia will report its third-quarter results on Nov. 17 at 1:20 p.m. PT, with an earnings call with Wall Street analysts and investors at 2 p.m. PT.