Huang Resigns as Nvidia CEO Effective Immediately; Stock Falls 4% After Recovering From Opening Losses
Key Facts
Nvidia announced on Thursday, November 12, that Jensen Huang had resigned as chief executive, effective immediately, and named Chief Financial Officer and Executive Vice President Colette Kress to lead the company on an interim basis. The announcement came as investors assessed a transfer of power at a company Huang had led for 33 years, according to The Washington Post. The company said its board would search for a permanent CEO, considering candidates from inside and outside the company. The Associated Press reported that the company had no succession plan prepared for the possibility of Huang's departure. The absence of a plan refocused investors on how leadership continuity at the company would be ensured.
Kress, who has served as chief financial officer since 2013, will take charge on an interim basis while the company searches for a permanent successor. The board said it would evaluate internal and external candidates, without naming a preferred candidate or setting a timeline for selecting the new CEO. The board also appointed Harvey C. Jones as Nvidia's first chairman. Jones is a venture capitalist who joined the company in its founding year, 1993. The appointment of a chairman adds a change to the governance structure as Huang leaves his executive role. A permanent leadership decision remains tied to the outcome of the search announced by the board.
Nvidia shares reflected the news in Thursday's session, falling 14% at the opening bell before trimming losses and trading down about 4% near midday, the Associated Press reported. Reuters said the stock remained down about 4% later, but had recovered from its session lows. By contrast, rival AMD's shares rose 7%, according to Reuters. The semiconductor index gained 0.2% after reversing its early losses, while the three major U.S. indexes edged higher. Peter Tuz, president of Chase Investment Counsel, said the market had "absorbed this reasonably well," noting that some of Nvidia's losses were offset by gains among its rivals.
AMD shares had risen more than 30% in the preceding days, according to The Washington Post, as investors bet the company would benefit from Nvidia's troubles. The newspaper linked some of the interest in AMD to the family relationship between the company's CEO, Lisa Su, and Huang, describing them as first cousins and reporting that both were born in Taiwan before moving separately to the United States as children. But the share moves do not mean Su is a candidate to succeed Huang; Nvidia's board announced a search for internal and external candidates, and the available information does not establish that she is among them. Huang worked at AMD for a time before helping found Nvidia in 1993. Su joined AMD in 2012 and became its CEO in 2014, according to the newspaper.
Before his resignation, Huang was Nvidia's largest shareholder, with a stake of about 3.6%, according to The Washington Post. The newspaper also reported that the board had begun an investigation into his conduct after Huang wrote the company an apology letter about an extramarital affair. That places his departure amid broader leadership and governance changes, alongside the search for a permanent CEO. The interim management's near-term test will come with the release of third-quarter financial results, scheduled for November 17. Nvidia said Kress's written commentary would be published as soon as the results are released to the public, expected at about 1:20 p.m. Pacific time.