Nvidia Is Down 30% Since Oct 6: You Pay Jensen Huang’s Bill
Jensen Huang resigned as Nvidia chief executive after 33 years, and the shares briefly fell 14 per cent. The company has lost 30 per cent of its value since October 6, and CFO Colette Kress is keeping the seat warm while the board searches.
Jensen Huang resigned as chief executive of Nvidia this week after 33 years leading the company, and its shares briefly plunged 14 per cent before recovering to close down almost 5 per cent. Since October 6, Nvidia has lost 30 per cent of its value.
The fallout reaches beyond one company. Nvidia's chips power the AI boom, and you pay Jensen Huang's mistakes if that boom slows.
How the scandal unfolded
It began with revelations that Huang had been romantically involved with a woman suspected of being a Chinese spy. Nvidia's share price has been hammered for a week on fears he would be forced out.
Then came reports of a second extramarital affair, with Nvidia executive Kimberly Powell. Reports have since surfaced of at least one more in-house relationship.
The suspected spy, named as Alice Huang, has reportedly returned to China. Beijing has denied all accusations of espionage.
A company built around one man
Nvidia began by making chips for computer games. Demand for AI has made it the only supplier of the chips that power the technology, and a single stock market boom has leaned on it for four years.
Huang kept tight control. He oversaw everything from financing to chip design, and 60 executives reported directly to him, where most chief executives have a handful.
Justin Wolfers, an Australian-born professor of economics at the University of Michigan, said that structure left the company exposed. "He has so many direct reports, he has made himself irreplaceable, but he hasn't done the work a CEO should do, which is creating a successor," he said.
Wolfers called it "an extraordinary fail of management and the board" for a company worth $US4.5 trillion.
Interim leadership and customers
After emergency board meetings, Nvidia handed the role to chief financial officer Colette Kress, who has held that job for 13 years. She is filling in while the board looks for a permanent replacement.
Nvidia has also helped finance many of its customers so that their expansion keeps demand for its chips running. One is the Australian group Firmus, which failed last month to raise funds for a listing on the Australian Securities Exchange.
Another is the US firm CoreWeave, which this week said it would rely less on traditional debt and more on Nvidia, its main supplier.
The scandal has also landed alongside broader worries that higher interest rates, and a less benign US government after the midterms, would slow the rollout of AI.
