Nvidia Without Jensen Huang: Stock Plunge and Governance Crisis

Key Takeaways

1Nvidia's market capitalization dropped by $573 billion last week

2Jensen Huang acknowledged an affair, an internal investigation is underway, and an executive has resigned

3Over 100,000 signatures have been gathered for a petition to reinstate Huang as CEO

4The lack of a succession plan and diverging scenarios are fueling uncertainty

Why it matters : Nvidia's governance is being tested as the company must navigate the loss of its iconic leader and the scale of the market and tech reaction.

Jensen Huang's situation triggers a real-world test for Nvidia. The company is facing a massive stock decline, succession questions, and sharp reactions from the tech community, while an internal investigation is underway.

Valuation Declines and Lack of Succession Emerges

Nvidia's market capitalization dropped by $573 billion last week, a decline surpassed only by 18 companies in the S&P 500. This fall comes as Nvidia lacks a clearly defined succession plan. The risk associated with reliance on a central figure is highlighted, especially since the organizational chart lists 60 direct reports to the CEO, which does not guarantee an immediate transition.

Admission of an Affair, Internal Investigation, and Departure of an Executive

Jensen Huang has admitted to having an extramarital affair and has expressed his apologies to his family. Nvidia stated that an investigation is underway to determine whether he may have been targeted by an intelligence operation conducted by a foreign country. The New York Times reported a second relationship involving an executive directly under Huang, who left the company on Thursday.

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Between Strong Support and Reminders of Company Rules

Silicon Valley figures have expressed their support for Jensen Huang. Sarah Guo called him an exceptional entrepreneur, while Shaun Maguire praised his role in American innovation and leadership in AI. A petition to reinstate him as CEO has surpassed 100,000 signatures, including those from Elon Musk and other prominent figures. However, others remind of internal rules: Jim Cramer emphasized on X that relationships with subordinates are regulated, regardless of the leader's competence. Stephen Witt compared the situation to the Bulls without Michael Jordan, illustrating the risk of dependence on a single leader.

What Other Cases Inspire and Hypotheses for the Future

Examples like Apple after Steve Jobs or Uber after Travis Kalanick show that companies can continue to thrive after the departure of a leader perceived as irreplaceable. Dick Costolo suggested that Nvidia could recall Jensen Huang in 3 to 4 years if the company were to miss one or two quarters, estimating that public outrage is often short-lived and comeback stories are appreciated. Alistair Barr highlighted new reports that challenge some information leading to Huang's downfall. Jensen Huang is described as a central figure at Nvidia, a voice for AI and a key negotiator, whose influence has accompanied the company's rise to the top of global market capitalizations.