Nvidia shares stabilize after Jensen Huang resigns amid espionage probe
Nvidia shares closed down 4.3% after a volatile session that saw the stock briefly drop 14% following the resignation of CEO Jensen Huang. The leadership change, triggered by allegations of espionage and personal misconduct, has accelerated a rotation of capital into competitors like AMD and Broadcom.
Nvidia announced that founder and CEO Jensen Huang has resigned and left the board, with CFO Colette Kress assuming interim leadership. The board, which previously had no chairman, appointed Harvey Jones, a board member since 1993, as its first chairman. The departure follows a week of reporting by the New York Times and Wall Street Journal alleging Huang had an affair with Alice Huang, an executive at Singaporean neocloud Megaspeed, who is suspected of working for Chinese intelligence. A second affair with Nvidia VP Kimberly Powell was also reported. US authorities allege the relationship compromised national security, and Huang is scheduled to testify before Congress this month.
The stock initially dropped 14% at the open, briefly valuing the company at under $4 trillion, but closed down 4.3% at $166. Trading volume hit a record 743 million shares worth $133.4 billion. Investors rotated into competitors, with AMD rising 6%, Broadcom 5.5%, and Alphabet 2%. Supermicro fell 11.3% on reports of a US Justice Department probe into potential chip smuggling to China. Cerebras surged 18% in after-hours trading following strong results. The S&P 500 fell 0.4% to 7,592 points, while the Nasdaq 100 closed down 0.3%. Ludwig Ensthaler, a VC investor, argued that while short-term uncertainty exists due to the loss of a founder-led CEO, the long-term substance of Nvidia's chip pipeline remains strong, with forward P/E ratios around 11x. He noted that the market is rotating rather than exiting AI, stating, "If you liked it at 200, you'll love it at 160."