Nvidia's stock dives as chipmaker's board weighs move to oust CEO Jensen Huang

Nvidia's stock experienced a significant decline following the end of trading on Wednesday, as reports emerged regarding the potential removal of CEO Jensen Huang by the company's board. This development coincided with Nvidia's initiation of an investigation into Huang, who acknowledged his involvement in an extramarital affair. U.S. intelligence agencies have raised concerns about Huang's connections with Alice Huang, a Chinese business executive believed to have ties to the Ministry of State Security in China. Sources informed CBS News that the Trump administration is aware of the board's considerations regarding Huang's position, with The Wall Street Journal being the first to disclose the board's intentions.

In after-hours trading, Nvidia's shares plummeted over 8%, settling at $159.51. This decline is part of a broader trend, with the company's market valuation decreasing by more than $450 billion since the announcement of the investigation into Huang's conduct on November 8.

Jensen Huang, who co-founded Nvidia in 1993, is regarded as a pivotal figure in the rapidly expanding artificial intelligence sector. The advanced chips produced by Nvidia are essential for powering cutting-edge AI models, and his potential exit would pose a significant challenge for the company, as analysts believe there is no clear successor ready to take his place.

Adam Crisafulli of Vital Knowledge emphasized the negative implications of the situation, stating that Huang is arguably the most notable executive in a leading company at the forefront of a vital industry. He noted that Huang had anticipated the rise of AI long before the advent of ChatGPT and had positioned Nvidia to take advantage of this trend.

Experts in corporate governance have indicated that Huang's alleged relationship with Alice Huang likely breaches Nvidia's code of conduct, which underscores the importance of avoiding conflicts of interest arising from personal relationships. The code mandates that employees maintain high ethical standards and consider whether their actions could withstand public scrutiny. In a message to Nvidia employees on Sunday, Huang admitted to the affair and expressed remorse, stating, "There is no excuse for what I did. I am deeply sorry," while also apologizing to his wife and their two children, who are also part of the Nvidia workforce.

Nvidia's board consists of 11 members, including Jensen Huang, although the other members are classified as independent according to regulatory filings. President Trump mentioned this week that the FBI is investigating the romantic and business connections between Jensen Huang and Alice Huang, who previously held a senior position at a Singapore-based firm that has been one of Nvidia's largest foreign clients, acquiring substantial amounts of advanced hardware.

The unfolding situation at Nvidia has attracted the attention of Congress, where lawmakers are expected to interrogate company executives about the potential diversion of its chips to China via third-party countries.

Dan Ives, a technology analyst with Yorkville Ives, stated that investors are now contemplating the implications of Huang's possible departure, including the impact on Nvidia’s short-term strategies and the potential outcomes of any government investigations. "Jensen is not replaceable by another CEO or group of interim executives," Ives remarked. "However, it appears Nvidia may need to proceed without Huang at the helm, which seemed like an implausible scenario just days ago."