Nvidia Shares Fall 14% at Open After Huang Resigns; Kress Named Interim CEO
Key Facts
Jensen Huang resigned as Nvidia’s chief executive on November 12, and the company named Chief Financial Officer Colette Kress interim CEO, the Associated Press reported, citing the company. The leadership transition at the company at the center of the artificial intelligence boom came as the board began considering permanent candidates from inside and outside the company. The stock fell 14% at Thursday’s opening bell before narrowing its decline to 4.2% by midmorning, according to the agency. The Nasdaq had turned higher by then. The resignation raised questions among investors about who would lead the company and whether its strategy would change.
Nvidia shares fell 8.2% in early trading to a level not seen in more than 16 months, Reuters reported. That measure differs from the opening decline reported by the Associated Press, as it reflects the stock’s movement at a different point in the session. On November 11, the stock closed at $173.73, according to EL7 data, in a session before the resignation was announced the following day. Reuters also reported that the stock’s forward price-to-earnings multiple, based on estimates for the next 12 months, was about 12 times. It said that was the multiple’s lowest level since November 2012.
The decline puts market pressure in the context of a long rally in the stock: Reuters reported that it had risen about 900% in the four years since ChatGPT’s launch ushered in the AI era. During that period, Nvidia’s relationship with the AI sector extended beyond selling chips to financing customers building infrastructure around them. Reuters said that financing role had drawn scrutiny over circular financing. Investors fear a new leader could change this approach, which ties the company to the expansion of businesses using its chips. An investor quoted by Reuters said: "If they have to pull back because of what’s happening, does that cut off funding to the smaller companies that need it? That’s an open question."
The absence of a previously announced permanent successor leaves the succession question open for the board. Reuters said Huang had not named a successor, and that analysts, before Kress was appointed interim CEO, viewed engineer Ian Buck and the chief financial officer as potential internal candidates. The company confirmed, according to the Associated Press, that the board would consider candidates from inside and outside Nvidia. Reuters quoted an analyst as saying that replacing Huang’s strategic vision "is a huge challenge." Another analyst pointed to two questions facing investors: "Who will take the helm, and how much will the strategy change under new leadership?" Those questions put the company’s future direction and its financing of smaller businesses at the center of investor attention.
Kress has extensive financial experience within the company: she became chief financial officer in 2013 and oversaw its global finance operations, according to the Associated Press. Before joining Nvidia, she spent three years at Cisco and 13 years at Microsoft. Kress said the company would continue to advance the work that made it a leader in accelerated computing and artificial intelligence. Her remarks come as interim management faces the task of maintaining continuity in the company’s direction while the board searches for a permanent chief. The company did not specify a timeline for choosing a successor in the facts it announced.
Nvidia is scheduled to hold a conference call on November 17 to discuss results for the third quarter of its fiscal 2027, according to an investor relations announcement dated October 28. The quarter for which the company will report results ended on October 25. The company set the call for 2 p.m. Pacific Time. The upcoming financial disclosure comes days after the leadership transition, putting the company’s performance in the period that ended before the resignation before investors. The choice of a permanent chief and the course of the strategy remain among the key issues the market will follow in the coming period.