Nvidia shares fall 9.7% after Jensen Huang steps down
Key Facts
Nvidia announced the resignation of Chief Executive and co-founder Jensen Huang, in a surprise shift that has put the leadership of the company, valued at more than $4 trillion, and the future of the AI ecosystem in doubt. The company said Chief Financial Officer Colette Kress would take over on an interim basis as it searches for a permanent successor from inside and outside the company, according to Reuters. The announcement came days after the board moved to identify potential candidates, as its members discussed Huang's future. Bloomberg said the board had hired an outside firm to help identify candidates. The agency had reported that the board was considering appointing an interim CEO until a permanent chief was selected.
Reuters reported that Huang would also leave the board, which appointed Harvey Jones as chairman; Jones is the former chief executive of Synopsys and a member of Nvidia's board. The move ends the leadership role of a co-founder who was one of the most prominent figures in the AI boom. Huang owns about 3.61% of Nvidia and is its fourth-largest shareholder, Reuters reported. The agency said his departure threatens to disrupt the AI ecosystem he helped fund, with Nvidia now a central player in it. The impact of the change therefore extends beyond the choice of a new chief executive to whether the company can maintain the strategy associated with its founder's leadership.
Nvidia shares fell 9.7% on Thursday after the resignation announcement, according to the Associated Press. The stock closed at $173.73 on November 11, compared with $168.89 in the previous session, according to EL7 data. It also recorded $186.64 on November 6 and $178.67 on November 9. The AP said the stock had fallen 27% from its record high through Wednesday's close, amid concerns about whether Huang would remain in his post and how the company would be run without him. Reuters estimated that the week's sell-off had cut Nvidia's market value by about $600 billion. The moves show that investors had been factoring succession risks into their calculations before the resignation was announced, with the decision adding another chapter to the stock's reassessment.
The crisis followed a review of succession options that featured two prominent internal names in the short term, according to a Reuters report: Ian Buck, who oversees AI products, and Chief Financial Officer Colette Kress. Buck leads Nvidia's hardware and software products for hyperscale computing and previously helped develop CUDA. That technical background put him among the candidates analysts and investors viewed as plausible in the short term. Kress, meanwhile, brings financial and management knowledge of the company, and Reuters reported that some board members favored appointing her interim CEO. The company confirmed her interim appointment, while leaving the search for a permanent chief open to internal and external candidates.
The move extended to shares of companies linked to the AI sector: the AP said competitors such as AMD and Broadcom rose sharply, while CoreWeave fell about 9%. Nvidia owns about 13% of the data center and cloud-computing company, according to the report. The divergence reflects that investors did not treat the news as an issue confined to Nvidia, but also reconsidered its impact on companies connected to its investments and its position in the sector's supply chain. Some competitors' shares, meanwhile, continued to benefit from expectations of a shift in demand or market share, according to the AP's description of trading. But the available information does not establish whether the divergence will persist once the picture around the new leadership settles.
For investors, Nvidia's results scheduled for the following Tuesday will be the next major test, according to Charu Chanana, chief investment strategist at Saxo Bank, as quoted by Reuters. Chanana said strong results could reinforce the AI growth narrative, but might not fully remove the discount investors apply for governance risks. That puts upcoming financial performance alongside the process of selecting a permanent CEO in the assessment of the company's ability to reassure the market. The probability that Huang would resign or be removed before year-end had reached 83% on Polymarket when Reuters prepared its earlier report, before the company announced his resignation. After the decision, the selection of a permanent successor and the new management's ability to continue Nvidia's strategy remain key issues for investors to watch.