Jensen Huang’s Future At Nvidia Hangs In Balance As Board Weighs Fallout: Analysts Warn Of Challenges Ahead

Nvidia CEO Jensen Huang’s possible departure would have implications well beyond Nvidia’s business.

• AMD and Broadcom stocks jumped after reports of the Nvidia board considering ousting Huang, while Micron and Super Micro fell.
• Bernstein slashed its rating on Nvidia shares to ‘Market Perform’ from ‘Outperform’ and trimmed its price target by half to $200.
• Nvidia has lost about $700 billion in market capitalization so far this week.

The Nvidia saga took a fresh turn on Wednesday with reports outlining a second affair CEO Jensen Huang shared, this time with a subordinate, and the company’s board reportedly planning to oust him.

The news triggered mixed moves across the semiconductor space. Nvidia shares plunged 7.7% in overnight trading in the evening, while those of competitors Advanced Micro Devices (AMD) and Broadcom (AVGO) advanced 3.5% and 2.5% respectively.

Nvidia-backed Intel (INTC) fell 2%, and while Micron (MU) and Super Micro Computer (SMCI), which sell their products alongside Nvidia chips, dropped 2% and 4.1% respectively. The iShares Semiconductor ETF (SOXX) slid 1.6% lower.

Huang’s possible departure would have implications well beyond Nvidia’s business. The company is the leading supplier of chips powering the AI boom, but Huang has also built influence as a dealmaker, directing Nvidia’s considerable resources toward investments across the AI supply chain and in a range of startups.

Between the revelation of both affairs, Nvidia stock, $NVDA, has erased about $700 billion in market capitalization, according to The Kobeissi Letter. NVDA stock is down 28% from its peak on Oct. 6. The chipmaker is scheduled to report its quarterly earnings on Nov. 17. 

Can Nvidia’s AI Dominance Survive? Analysts See Nvidia Weathering Fallout, With Difficulty

Commentators said that while Huang’s future as the CEO is uncertain, Nvidia’s dominance in the market will likely stay intact. 

“Remember: AI infrastructure customers will act in their best interest. That means they’ll keep buying just as many $NVDA chips with or without Jensen,” Gene Munster, managing partner at Deepwater Asset Management, said in an X post, adding that he expects the stock to bounce-back next week.

Investor Dan Niles said Nvidia’s product pipeline and “deep bench of direct report” will sustain the chipmaker for two years. However, “for the AI trade and Nvidia’s stock, the bigger question for me remains the same. Was June 22nd the top in the AI trade overall? I do not think so,” he said.

However, not all agree. Earlier in the day, Bernstein slashed its rating on Nvidia shares to ‘Market Perform’ from ‘Outperform,’ according to TheFly. The investment research firm trimmed its price target by half to $200, which now implies a 15% upside.

“Admittedly, it's a tricky time for $NVDA given this Spy probe/affair news which doesn't look to be going away anytime soon,” Mark Newton, the global head of technical strategy at Fundstrat, said in an X post.

“The dust shall settle soon enough, but if this bounce fails to get back over 220 into early next year, and momentum cannot improve enough, then this could be setting up for a tricky Spring.”

ARK Investment Management’s chief futurist Brett Winton said if Nvidia’s board does oust Huang prior to conducting a thorough investigation and against the obvious immediate interest of shareholders, “they are taking on huge liability,” arguing that Nvidia needs to provide information about the investigation to shareholders.

The China Probe Adds Another Layer To Leadership Crisis

Huang on Sunday admitted to having an affair with a person the U.S. authorities suspect of being a Chinese spy, although Beijing has denied those allegations.

Still, scrutiny has intensified on Megaspeed, the company the alleged spy Alice Huang was linked to, which was already under the scanner of U.S. authorities.

To be sure, The Commerce Department was investigating Megaspeed over its ownership and suspicions that Nvidia chips shipped to Malaysia were being diverted to China, but the probe was dropped last year. 

Axios reported on Wednesday that Commerce Secretary Howard Lutnick ​stalled President Donald Trump's crackdown on companies suspected of diverting Nvidia ‌chips to China. 

Reports Of A Second Relationship Adds To Scrutiny

On Wednesday, The New York Times reported that Huang had an illicit relationship with Nvidia's vice president of health care, Kimberly Powell. The two were reportedly captured on video being affectionate at a San Jose hotel during a Nvidia conference in March. 

Nvidia is reportedly working with an outside firm to find a replacement for Huang and is weighing the idea of naming a temporary chief while searching for a permanent one, Bloomberg reported.

Retail Sentiment For NVDA, Linked Stocks

On Stocktwits, the retail sentiment for NVDA climbed higher in the ‘extremely bullish zone. The sentiment was ‘extremely bullish’ for AMD and AVGO, for ‘neutral’ for SOXX, and ‘bearish’ for AVGO.

“$AMD Everything bad with Jensen is a positive catalyst for this name. Lisa couldn't have dreamed of a better nudge,” said a trader. Another wrote: “$AVGO tough day for those of us with large NVDA positions. grateful for my AVGO investment though.”

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