NVIDIA loses only CEO in 27 years and enters transition

NVIDIA announced on Thursday, November 12, that Jensen Huang stepped down as CEO. CFO Colette Kress takes over as interim CEO.

The co-founder is also leaving the board of directors. In addition, he remains the company's fourth-largest shareholder, with a stake of about 3.61%.

The market's reaction was immediate. Shares fell more than 10% in pre-market trading.

The timeline that led to the resignation of the CEO of

Moreover, the crisis broke out over the previous weekend.

However, the executive admitted to an extramarital relationship with a Chinese businesswoman. American authorities suspect she was engaged in espionage for Beijing.

After that, the case gained new chapters. A second relationship attributed to him came to light on Wednesday, according to the New York Times.

The company named in the case is under investigation. In addition, Megaspeed, a spinoff of a Chinese gaming company, is among the manufacturer's largest clients in Southeast Asia.

The suspicion involves smuggling advanced chips to China. Both companies deny any wrongdoing.

The investigation proceeded on several fronts. The board hired Joon H. Kim, a partner at the law firm Wachtell, Lipton, Rosen & Katz, to lead an independent investigation.

In addition, the Department of Justice is investigating the activities of the company linked to the businesswoman. Lawmakers also demanded testimony before Congress.

The lack of a succession plan at NVIDIA

This point deepens the problem considerably.

Moreover, NVIDIA had never had another CEO. The 63-year-old executive had held the position since the company's founding.

The organizational structure reinforced this concentration. About 60 leaders reported directly to him.

The operational detail is striking. Each employee wrote a list of their five most important tasks, published internally for his review.

He also personally reviewed every employee's compensation.

The interim replacement has a different profile. Kress joined the company 13 years ago, after stints at Microsoft and Cisco, with a career dedicated to financial roles.

The board is already working with an outside firm in the search for a permanent successor. In addition, names mentioned in the industry include Lisa Su, Rene Haas, and Sanjay Mehrotra.

The size of the legacy and the effect on the ecosystem

However, the numbers explain the commotion.

The stock has risen more than 700,000% since its IPO in 1999. Market value came to exceed $5 trillion.

The influence, however, goes beyond the balance sheet.

In addition, the company used its financial strength to support dozens of AI companies. OpenAI and Anthropic are on that list.

It also invested in cloud computing, including CoreWeave. This move inspired similar deals across the entire industry.

Not everyone sees this favorably. Michael Burry and other Wall Street names warn that circular deals artificially inflate demand for AI.

Thomas Ferguson, an investor at Blue Bear Capital, summed up the executive's weight. According to him, there has hardly been anyone so fundamental to sustaining an entire industry.

What analysts say about the operation

The assessment separates NVIDIA's business from its leadership.

Stacy Rasgon, of Bernstein, said the fundamentals remain clearly intact. In his view, the numbers remain huge and likely still rising.

As it stands, he also does not foresee major operational difficulties during the search for new leadership.

Even so, the recommendation changed. The analyst downgraded the stock to market perform and lowered the price target to $200.

In addition, the main doubt lies in the investments. He questions the fate of the company's contributions to the AI supply chain, along with the guarantees attached to them.

Why this matters to your project

First, the GPU supply chain depends on this company. Any strategy adjustment reflects on delivery times and prices.

Second, financing deals sustain cloud capacity. Changes there affect instance availability for training and inference.

Third, the China question remains open. However, export restrictions shape where and how models are trained.

Finally, it's worth following how the succession is decided. Financial profiles and technical profiles tend to prioritize very different agendas.

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