Analysts warn the AI chipmaker faces a 20% further drop if its co-founder departs with no succession plan in place
Nvidia's board convened Wednesday to decide whether to remove Jensen Huang as chief executive, sending the company's shares down more than 6% in premarket trading Thursday as Wall Street began pricing in the risk that one of the AI industry's most consequential figures could soon be gone.
The board meeting followed Huang's acknowledgment in a letter to staff that he had been unfaithful to his wife. The Wall Street Journal reported that one of the affairs involved Alice Huang, an executive at Singapore-based data company Megaspeed - a major Nvidia customer that U.S. intelligence officials believe has been diverting chips to China and that has been under Commerce Department investigation since late 2024.
The Justice Department is now reportedly leading multiple investigations related to Alice Huang. The New York Times separately reported a second affair involving Kimberly Powell, a senior Nvidia executive who oversees the company's healthcare division and reports directly to Huang.
The independent members of the NVIDIA Board have retained former acting U.S. Attorney of the Southern District of New York Joon H. Kim and his firm Wachtell, Lipton, Rosen & Katz to conduct a thorough and independent investigation as was announced on Sunday.
The convergence of a foreign intelligence dimension and a workplace relationship has made the board's position materially harder, according to analysts.
Stacy Rasgon, a senior analyst at Bernstein, told CNBC that the Powell relationship in particular shifts the calculus. "It's much tougher for the board to leave him in position," he said. Bernstein simultaneously slashed its Nvidia price target from $400 to $200.
The absence of a named successor compounds the investment risk. Huang has said publicly that he does not believe in succession planning, preferring to pass on knowledge continuously rather than designating a replacement. Nvidia's own proxy statement flags this as a material risk, warning that the company is "highly dependent on the services of our longstanding executive team" and that inadequate succession planning could "hinder our strategic planning, execution, and long-term success."
For advisors evaluating the stock, Rasgon framed the structural problem bluntly: "Jensen is Nvidia, right? He is the visionary. The reason they're in the position that they're in today is because he made decisions 10 years ago. Who is the right person now to make the decisions for the next 10 years? I don't intuitively know who that person would be."
Richard Reyle, chief investment officer at Questar Capital Partners, went further. Speaking to CNBC, he argued that neither of the board's available paths is good for shareholders: keeping Huang in place means months of congressional scrutiny and potential subpoenas, while removing him eliminates the person most responsible for Nvidia's dominance in AI chips. "That's just going to make the stock uninvestable," Reyle said, adding that his view applied to Nvidia specifically - not to AI as a broader theme.
While Nvidia may not have a succession plan, Huang is already being courted by Elon Musk who wrote on X.com that he would be “honored” to have the executive join his team.
Nvidia stock under pressure
Nvidia's stock is already down more than 20% over the past month. Several Wall Street analysts told CNBC that a forced departure could trigger a further 20% decline. Meanwhile, shares of AMD and Broadcom rose 3.9% and 3% respectively in premarket trading Thursday, suggesting some rotation out of Nvidia and into rivals.
President Trump, who has cultivated a close relationship with Huang and approved Nvidia chip shipments to China over security objections, defended the CEO earlier this week, describing him as an "amazing guy" and an "honorable man." Trump said Huang had told him he was unaware of Alice Huang's suspected intelligence ties. Those approvals and the broader relationship between the two are now under scrutiny from lawmakers, several of whom have called for Huang's resignation and threatened subpoenas.
Huang, 63, co-founded Nvidia in 1993 and owns approximately 3.6% of the company, making him one of its largest shareholders. The chipmaker's graphics processing units became the central hardware of the global AI buildout - a transformation that InvestmentNews has tracked closely, including how advisors have assessed Nvidia's AI chip dominance and what the stock's earnings volatility means for client portfolios.
