The key facts

  • Nvidia shares fell more than 8% after the US market close following a WSJ report that the board of directors was preparing to remove Huang
  • According to Reuters, citing an informed source, the board met late Wednesday evening to decide the CEO's fate
  • On Sunday the board announced an independent investigation after reports of a foreign intelligence operation, expressing confidence in Huang

Nvidia board discusses ousting the company's founder

Nvidia shares fell more than 8% in after-hours trading on Wednesday after The Wall Street Journal reported that the company's board of directors is preparing to remove CEO Jensen Huang. According to Reuters, citing an informed source, the board met late Wednesday evening US time to decide whether to remove Huang from his post. Notably, in the regular session the shares closed up 2.9%, at $173.73.

Investigation and personal scandals

A series of publications triggered the escalation. On Sunday, Nvidia's board of directors announced an independent investigation after reports that Huang had become the target of a foreign intelligence operation. At the time, the board said it had no reason to believe that the company's trade secrets or US national security had been compromised, and expressed confidence in Huang. Huang admitted to an extramarital affair; Reuters reported that the woman featured in the story is suspected of spying for China. In addition, The New York Times reported on Wednesday, citing five former Nvidia employees, a second extramarital affair — with the company's vice president for healthcare, Kimberly Powell.

Why a leadership change matters for the entire industry

Huang co-founded Nvidia in 1993 and has become virtually synonymous with the company: its dominance in the market for chips used to train artificial intelligence models has made Nvidia the main symbol of the AI boom. According to Euronews, a leadership change could have consequences for the entire industry. Uncertainty over Nvidia's leadership has already affected markets: on Thursday morning Taiwan's Taiex lost 2.6%, Hong Kong's Hang Seng 1.2%, Japan's Nikkei 225 0.7%, the Shanghai Composite 0.6%, and South Korea's Kospi 0.2%. Meanwhile, futures on the European DAX and FTSE 100 indices were up 0.7% each ahead of the open.

Trading context

Nvidia's decline came against the backdrop of a broad rally on Wall Street: the Nasdaq Composite rose 1.6% on Wednesday, the S&P 500 1.3%, and the Dow Jones 0.5%. Shares of CoreWeave, which rents out access to AI chips through a cloud platform, jumped 24.7% after its quarterly loss came in smaller than analysts expected. The rally continued the recovery of AI stocks after last week's sell-off, when the Democrats' victory in the congressional elections sparked fears of tighter regulation; investors are also assessing whether AI demand can generate enough profit to justify the industry's massive spending. The US government bond market was closed for Veterans Day.