Nvidia Shares Fall 14% at Open After Huang Resigns; Chris Named Interim CEO
Key Facts
Jensen Huang resigned as Nvidia’s chief executive with immediate effect on Thursday, November 12, and Chief Financial Officer and Executive Vice President Colette Kress took over on an interim basis, the company said, according to the Associated Press. The stock fell 14% at the session open before narrowing its losses to about 4% near midday, the news agency reported. Reuters said the stock was down about 4.8% during the session, while AMD and Broadcom shares each rose about 6%. The stock’s moves showed investors treating the leadership transition as an immediate development for a company whose leadership has been associated with Huang for more than 30 years. Nvidia said Kress would run the company during the transition as the board searches for a permanent successor.
Kress has been chief financial officer since 2013 and is also an executive vice president, according to the Associated Press. Nvidia said it is considering candidates from inside and outside the company for the permanent CEO role. The company did not have an obvious successor ready when Huang departed, the news agency reported. Reuters had previously reported that Kress and veteran engineer Ian Buck stood out among internal candidates in the eyes of investors and analysts before Huang’s resignation. Mentioning their names does not mean the board has made its choice; the company said the search includes internal and external candidates. That leaves the board tasked with selecting a permanent leader while the company continues to operate under interim management.
The resignation followed a series of reports concerning Huang’s relationships and security investigations linked to him. The Associated Press said reports had described a relationship with a businesswoman whom U.S. intelligence officials suspect of being a Chinese spy, as well as another relationship with an Nvidia employee who reported directly to him. These are allegations and media reports, not announced investigative findings. Nvidia’s board announced on November 8 that it had opened an independent investigation into reports that Huang had been targeted in a foreign intelligence effort. The board said it saw no reason to believe national security or company secrets had been compromised. The company said a committee of independent board members, assisted by independent outside legal counsel, would oversee the investigation.
Alongside the investigation, the company faced a derivative lawsuit filed by a shareholder in Nvidia’s name against Huang and the board in the U.S. District Court for the Northern District of California. Bloomberg Law said the suit was filed on Wednesday, one day before Huang’s resignation. The suit concerns the responsibility of Huang and board members; the available facts do not include a judicial outcome or resolution of the allegations. Singapore’s Ministry of Home Affairs also said police had contacted the FBI and the U.S. Department of Justice, but received limited information or assistance. These legal and investigative proceedings come as the board faces questions about governance and the choice of its next leader. Nvidia named Harvey C. Jones, an entrepreneur and venture capitalist, as the first chairman of the board in the company’s history.
The sensitivity of the leadership transition reflects Huang’s place in the company’s history. He co-founded Nvidia with other engineers in 1993 after discussing the idea at a Denny’s restaurant in San Jose, according to the Associated Press. The news agency said the company had no succession plan in place for the possibility of his departure and that he had been associated with its leadership for more than 30 years. During the AI-related computing boom, Nvidia shares rose sevenfold through early October, and its market value reached nearly $6 trillion at one point, according to Reuters. A portfolio manager at ClearBridge Investments said the biggest risk was execution, describing Huang as "the primary leader of a highly complex ecosystem." In Thursday afternoon trading, the stock was down about 5%, and more than 30% below the record high it had reached a little more than a month earlier, according to the Associated Press.
Investors are turning their attention to Nvidia’s third-quarter fiscal 2027 results, scheduled for November 17, according to the company’s calendar. The date comes days after the leadership transition, making the results the market’s first near-term checkpoint on the company’s performance following Huang’s resignation. The Associated Press had noted that Nvidia would report results on the Tuesday after its report published on November 12. In the meantime, the company said it is considering internal and external candidates, without naming a permanent successor. Kress remains interim CEO until the board completes its search and selects a new leader.