Nvidia CEO Jensen Huang Resigns, Creating a ‘Stress Test for the AI Boom’
Jensen Huang has resigned as CEO of $4 trillion chip giant Nvidia, just days after news broke that he was having an affair with a Chinese data center executive alleged to have ties to China’s spying operations.
The company named Colette Kress, its chief financial officer, as interim CEO. Nvidia announced the news in a press release Thursday morning.
The removal of Huang as CEO follows the revelation over the weekend that Nvidia’s board of directors had opened an investigation into whether he had been targeted by foreign intelligence.
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Nvidia, which has at times in recent years been the world’s largest by market capitalization, now begins a search for a new permanent CEO. Huang, one of the company’s three co-founders, has served as president and CEO since Nvidia’s start in 1993. Its search for a permanent successor will include internal and external candidates, according to the press release. Harvey C. Jones, a former CEO of Synopsis, will serve as Nvidia’s first-ever chair of the board of directors.
A fast-moving scandal
Huang had been having an affair with Alice Huang (no relation), a Chinese citizen and executive at Megaspeed, a Singapore-based data center company that buys chips from Nvidia to run data centers that sell computing power to Chinese AI labs. News reports citing US intelligence officials have claimed Alice Huang was working as a spy for China. She was reportedly under surveillance by US intelligence, as reported in late October by The New York Times.
The Information reported on Tuesday that Alice Huang is believed to be involved with a network of Chinese companies that facilitated the sales of $7.5 billion in chips to China. The US has tried to control China’s access to advanced chips for years, but reports show that there are still illegal operations smuggling chips on the banned list from the US to China.
The New York Times also reported on Wednesday a separate affair between Huang and one of his direct reports at Nvidia.
The announcement of an investigation has rocked the AI chip behemoth, which makes the cutting-edge chips that power AI tools and AI data centers. A proposed class-action lawsuit was filed on Monday against Nvidia, charging the company made false or misleading statements about Huang’s affair and the company’s relationship with Megaspeed.
On Tuesday, the Nvidia board said it had retained Joon H. Kim, a former acting US attorney for the Southern District of New York, and his firm Wachtell, Lipton, Rosen & Katz to conduct an independent investigation.
Ripple effects
Nvidia’s stock price opened at just over $150 per share Thursday morning — half an hour after Huang’s resignation was announced. That was down from where it closed Wednesday at nearly $174 per share. But the stock has been tumbling since October, when the price hit above $240, as it became apparent that political winds were turning against the AI industry and its vast data centers filled with Nvidia chips.
Markets turned against AI stocks last week after Democrats secured huge gains in Congress and in the governors offices of key data center states, like Texas and Ohio. The news around Huang and his resignation will further test AI’s clout on Wall Street.
Huang has been a prominent voice cheerleading the growth of AI. Nvidia has sold the picks and shovels for the AI gold rush — powerful GPUs and supercomputers capable of the complex computations needed to train and operate models. He became a close ally of President Donald Trump in the past two years, even taking a call from the president on stage during a podcast taping. Trump spoke up in defense of Huang earlier this week, saying he knows Huang and thinks he’s an “honorable man.”
Huang’s resignation and the scandal surrounding it pose serious questions not just for Nvidia but for all of the companies connected to it, from data center operators to AI developers and more, who have benefited from Nvidia’s financial support and investment.
“The sudden resignation of Jensen Huang is about more than succession at the world’s most important AI chipmaker,” Stephanie Balaouras, vice president and group research director at the analyst firm Forrester, said in an email. “Nvidia’s leadership crisis is a stress test for the AI boom.“
The company could quickly find stability under new leadership, Balaouras said, but it may not. “If its stock, financing relationships, or ecosystem commitments remain under sustained pressure, that would add evidence to the fragile side of the AI Bubble ledger,” she said.