Jensen Huang Resigns as Nvidia CEO, and CFO Colette Kress Is Named Interim Chief

In a regulatory filing, Nvidia said its board accepted the resignation on Wednesday, November 11. Kress, CFO since September 2013, will keep that job alongside the interim role. The board also named Harvey C. Jones, a director since 1993 and a former chief executive and executive chairman of chip design software company Synopsys, as the first chair in Nvidia's history. It said it would consider both internal and external candidates for the top job.

The resignation removes the founder who has run Nvidia since 1993 and built it into the main supplier of the processors used to train and run AI models. It also comes five days before Nvidia's fiscal third-quarter results, due on Tuesday, November 17, with an earnings call at 2 p.m. Pacific time. That call will be the first public test of the company under new leadership.

From Investigation to Exit in Four Days

Nvidia's board opened an independent investigation on November 8, after The New York Times and the Financial Times reported that Huang had had a relationship with Alice Huang, also known as Huang Le. She has held a senior role at Megaspeed, a Singapore-based cloud provider and Nvidia customer, and US officials suspect she worked for China's Ministry of State Security. The two are not related, and Beijing has rejected the spying claims. In an email to staff that Sunday, Huang acknowledged that he had been "unfaithful" to his wife and apologised.

On Wednesday, The New York Times reported that Huang had also had a relationship with an executive who reported directly to him, citing people who had worked at Nvidia. The Wall Street Journal then reported that the board was preparing to remove him. A source familiar with the matter told WIRED that the relationship with a subordinate, together with Huang's business dealings with Megaspeed, probably weighed more heavily on the board than the espionage allegations.

Nvidia's announcement included no statement from Huang. "Jensen's contributions to NVIDIA are profound," the company said, thanking him for his "immeasurable contributions to the company and the industry." Jones said the board "has full confidence in Colette and the leadership team." Kress said she was committed to "building on the extraordinary foundation Jensen created over the last 33 years."

A Sell-Off Measured in Trillions

Nvidia shares fell more than 13% at Thursday's open to about $160, which pushed the company's market value below $4 trillion, according to CNBC. The stock closed at $173.73 on Wednesday, down from a closing high of $239.24 on October 6, and the company has lost more than $2 trillion in market value since early October. Stifel cut its price target to $205 from $315 but kept its buy rating.

"The stock is now pricing in a leadership discount, as the Jensen premium evaporates," Michael Landsberg of Landsberg Bennett told CNBC. Jeremiah Buckley of Janus Henderson said the change "could be a clearing event for the company."

Huang is Nvidia's largest individual shareholder but owns only about 3.5% of the stock and has no super-voting rights, so the board was free to act. He ran an unusually flat company, with about 60 direct reports, no chief operating officer and no named successor.

Washington Is Not Finished

The resignation does not end the political scrutiny. Senator Elizabeth Warren said it "does not absolve him, other executives, or the company as a whole." Representative Brian Mast, chairman of the House Foreign Affairs Committee, said Huang could be asked to testify as soon as next week. The affair has raised questions about Huang's push to sell advanced chips into China. The New York Times has reported that the Commerce Department had been examining whether Megaspeed helped Chinese firms get around US export controls, and that the inquiry was later moved to the Justice Department.

Names in circulation for the permanent job include Kress; Ian Buck, the Nvidia veteran who led development of the CUDA software platform; Arm chief executive Rene Haas; AMD chief executive Lisa Su; and Apple hardware chief Johny Srouji. Dan Ives of Yorkville Ives & Co. told CNBC that Kress was the right person to steady the company, but said he expects the board to hire from outside in the longer run.