Nvidia Shares Fall 13.7% as Jensen Huang Resigns Over Affair

Nvidia stock opened 13.7% lower after Jensen Huang resigned with immediate effect over an affair with a suspected Chinese spy, ending his more than 30-year tenure at the chipmaker he founded. The company named Chief Financial Officer Colette Kress as interim chief executive.

The drop followed an after-hours slide of more than 8% on Thursday, triggered by a Wall Street Journal report that the board was preparing Huang's dismissal. Should those losses hold, Nvidia will have shed roughly $600 billion in market value since the board announced its investigation.

Who steps in for Huang?

Kress has spent more than a decade at Nvidia. Her résumé includes finance roles at Microsoft, Cisco and Texas Instruments. At Nvidia, she ran the strategy of financially supporting AI-industry customers through a large number of deals.

For Andreas Lipkow, chief market analyst at CMC Markets, the arrangement cannot last. Kress cannot fill Huang's position, he argues, because Huang was the architect of the entire company and its technological visionary.

"This role cannot be replaced by anyone. All potential interim solutions would be bad stopgaps," Lipkow told ntv.de.

The structural risk is concrete. Around 60 managers report directly to Huang, and the company is built tightly around him. He led Nvidia from graphics-card vendor to AI giant over three decades.

What does the exit cost Nvidia technologically?

Market observers warn the company could lose its technological lead over rivals such as AMD and over its own tech customers. Lipkow sees no dramatic short-term damage, but a clear long-term one.

"In the long run, however, the technology group will no longer benefit from Huang's far-sighted and lucrative strategies in their previous form," Lipkow said. He added that AMD is not the only competitor close behind. "Other hyperscalers like Alphabet and Meta are also currently in serious development phases and could exploit the situation."

The market has already started pricing this in. While Nvidia fell, AMD and Broadcom shares gained clearly at the same time. Lipkow called the decline no revaluation of Nvidia's business, saying: "It merely represents a risk premium for the prevailing uncertainty. The market is thus already beginning to shift part of the Nvidia risks toward the competitors."

Does the affair threaten Nvidia's China business?

The suspected espionage case puts Nvidia's sensitive China operations back in focus. Huang had pushed hard to keep selling modern chips into China despite US sanctions. His argument: without those sales, the People's Republic will develop its own semiconductors that compete with Nvidia globally and, over time, undermine US AI leadership.

Whether Washington halts China exports entirely over the affair depends on far more than current headlines, according to Lipkow. The administration will weigh other factors and likely wants to avoid another escalation of the trade conflict.

"A renewed escalation would create additional unrest in the current domestic political situation and considerably weaken the position of the US president and his party," Lipkow said.

Even a full exit from China would have limited consequences for Nvidia's business model, he added. The company is growing exceptionally strongly outside the country and remains viable in its operating business largely without the Chinese market.

Do founders ever get replaced successfully?

Tech history offers precedents. When Apple co-founder Steve Jobs handed over to Tim Cook in 2011, Wall Street feared the end of innovation; Cook multiplied the market value. Microsoft survived Bill Gates' antitrust-shadowed withdrawal at the turn of the millennium, and after a stagnant phase Satya Nadella rebuilt the software giant into a highly profitable cloud leader.

The lesson, and the open question for Nvidia's board: companies eventually outgrow their founders, and even the most prominent figures prove replaceable.