Jensen Huang Resigns as Nvidia CEO After Affair Revelations

Nvidia CEO Jensen Huang has resigned after revelations of two extramarital affairs, including one involving a woman suspected by US intelligence officials of having links to Chinese intelligence, while the company's shares fell more than 10% in premarket trading in New York.

The 63-year-old, who led Nvidia for 33 years, will be replaced on an interim basis by Chief Financial Officer Colette Kress, who will retain her finance responsibilities. Nvidia's board is expected to assess both internal and external candidates for a permanent successor.

Huang's departure follows his admission in a statement on Sunday that he had been unfaithful to his wife. US intelligence officials suspect the relationship was with Alice Huang, an executive at Singapore-based Nvidia customer Megaspeed, whom they believe may be a Chinese spy. Nvidia has previously said it had no reason to believe that company secrets or US national security had been compromised, while Beijing dismissed the espionage allegations as “baseless”.

Further details about Alice Huang's business connections have emerged, including links with Hong Kong dating back two decades. She also held a directorship at a company sharing an address with a Russian-linked robotics firm sanctioned by Washington.

The scandal widened on Wednesday when The New York Times reported that Huang had a second relationship with Kimberly Powell, 48, Nvidia's vice president of healthcare, who reported directly to him. The newspaper also reported that Huang had been filmed showing affection toward Powell at a conference in March. Nvidia's board met on Wednesday evening in the United States to discuss whether he could remain in his position following the reports.

Kress, who joined Nvidia in 2013 after working for major technology companies including Microsoft, Cisco and Texas Instruments, is a familiar figure to investors. She has regularly appeared alongside Huang on earnings calls and, despite not having his technical background, has played an important part in using Nvidia's financial resources to support the broader artificial intelligence ecosystem.

The company's shares dropped by more than 10% in premarket trading, wiping out over USD400 billion in market value. Other technology stocks also came under pressure, with CoreWeave down 14%, Micron Technology losing 6% and the Nasdaq technology index declining by more than 1%.

More than USD600 billion had already been erased from Nvidia's market capitalization during the week as investors reacted to the possibility that Huang might leave the company, which he founded 33 years ago and which ranks as the world's second-most valuable company after Apple.

The developments are expected to unsettle financial markets, which were already volatile after the Democrats swept the midterm elections last week. Anthropic, however, intends to proceed with its planned blockbuster initial public offering.

Nvidia has become the dominant provider of semiconductors used to train and operate artificial intelligence models, benefiting enormously from the rapid expansion of the sector. Analysts estimate that it supplies approximately 90% of the chips used for AI training and 70% of those required to run models. Since ChatGPT was launched in November 2022 and companies began investing heavily in AI infrastructure worldwide, Nvidia's market value has grown by around USD4.5 trillion.

The company has also become a major source of financing for the AI industry as its sales have expanded. Dealroom data show that Nvidia took part in 53 venture funding rounds worth more than USD100 million during the first eight months of the year, exceeding the number involving leading venture capital firms such as Sequoia and Lightspeed. Some commentators have described the company as the “central bank of AI”. However, exports of Nvidia's most powerful chips to China are prohibited.

Huang's departure leaves Nvidia facing a leadership gap only days before its quarterly financial results, scheduled for November 17. The 63-year-old reportedly had about 60 direct reports and had previously voiced doubts about formal succession planning.

Kathleen Brooks, research director at XTB, said Huang's exit could have far-reaching consequences for investment in artificial intelligence. “If Huang goes then the long term ramifications include no single oracle like Jensen to inspire confidence in the AI trade when there are periods of volatility,” she said.

The leadership change also raises questions about Nvidia's continued financing of smaller AI companies and whether increased scrutiny of chip exports could put its ambition of generating USD1 trillion in revenue by 2028 at risk.

Chris Beauchamp, chief market analyst at IG, said the company was losing the chance to arrange a planned handover of leadership. “Nvidia is much bigger than one man now, but this isn’t the way anyone thought it would happen,” he said.

Wall Street expects Nvidia's revenue to climb by nearly 91% to USD108.8 billion when the company reports its results on November 17.