Nvidia Board Reportedly Preparing to Oust CEO Jensen Huang; Shares Drop About 8% After Hours

Nvidia's board is preparing to oust founder and chief executive Jensen Huang and could meet as soon as Wednesday to decide his future, The Wall Street Journal reported on November 11. Shares fell about 8% in after-hours trading after the report, erasing the day's gains. The company has not commented, and Reuters said it could not immediately verify the report.

What was reported, and the market reaction

The Journal cited people familiar with the matter. CBS News reported the same, citing two sources, and said the Trump administration was aware of the matter. Bloomberg reported that Nvidia is working with an outside firm to identify possible successors and is weighing naming an interim chief executive.

The market reaction was sharp. Nvidia closed Wednesday at $173.73, up 2.9% on the day, then fell about 8% after hours to roughly $157 to $160. Over the previous two sessions the stock had already fallen nearly 10%, wiping out about $430 billion in market value. Earlier this week Microsoft passed Nvidia as the world's most valuable company.

How the crisis began

The crisis stems from questions about Huang's personal conduct. On November 8, he told employees he had been unfaithful to his wife, without identifying the other party. The same day, the board said a committee of independent directors, assisted by outside counsel, would investigate reports that Huang had been the target of a foreign intelligence effort.

The affair involves Alice Huang, a former executive at Singapore-based data company Megaspeed, who is not related to Jensen Huang. The Information, as relayed by Reuters, reported that she allegedly helped move at least $7.5 billion of Nvidia chips to Chinese firms; Reuters said it could not independently verify that figure, and Nvidia did not respond. No investigation has found that Nvidia or Huang violated export controls.

The New York Times reported on November 11 that Huang had a second relationship with Kimberly Powell, Nvidia's vice president of health care, an executive who reports directly to him. After that report, Senator Kevin Cramer, a Republican on the Senate Banking Committee, called on Huang to resign immediately.

Legal and political pressure

Investors have taken legal action. On November 9, a shareholder filed a proposed class-action lawsuit in federal court in San Jose, California, accusing Nvidia and Huang of failing to disclose the relationship and the potential national security risks. A lawsuit is not a finding of fraud, and Nvidia has not been found liable for securities violations.

In Congress, three Republican House committee chairmen have asked Huang for a closed-door briefing on the allegations, with a subpoena possible if he does not respond. Reuters also reported on November 11 that Northwestern Polytechnical University in Xi'an, China, bought two restricted Nvidia H200 chips in October through a domestic reseller, renewing scrutiny of export-control enforcement; this site reported that story separately the same day.

No successor in waiting

If the board acts, the biggest question is succession. Huang, 63, co-founded Nvidia in 1993 and has led it ever since. He owns about 3.58% of the company, making him its largest individual shareholder. The annual report warns the company is highly dependent on its longstanding executive team and that a failure of succession planning could cause harm.

Huang has long resisted formal succession planning and runs a flat structure, with 50 to 60 executives reporting directly to him and no clear number two. Names floated as possible interim choices include chief financial officer Colette Kress, but the company has confirmed no candidate. The board itself has no chair; independent lead director Stephen Neal presides.

The board's latest public word, from November 8, remains that it has confidence in Jensen and his leadership team. Nvidia reports third-quarter results on November 17, when markets will watch closely for any statement on the matter.

Sources: The Wall Street Journal, Reuters, Bloomberg, The New York Times, CBS News and TechCrunch. Photo: Nvidia CEO Jensen Huang (file photo).