Nvidia stock pares morning losses after CEO Jensen Huang announces resignation

Nvidia's board convened late Wednesday to determine CEO Jensen Huang's future following reports of a second extramarital affair involving a senior executive, leading to his immediate resignation from his roles as president, CEO, and board member. Colette Kress, Nvidia's CFO, was appointed as interim CEO. The company's bylaws allow for Huang's removal by a majority vote of its 11 directors, either with or without cause.

The latest scandal came three days after Huang admitted to an affair with a Chinese woman, Alice H., believed to be spying for China. Megaspeed, the Singapore-based AI data center company, denied the allegations and pledged cooperation with US investigators.

The second scandal has damaged Nvidia's reputation, causing its market capitalization to drop over $600 billion to $4.2 trillion. Nvidia's shares fell more than 9% in premarket trading Thursday, down from a 10% decline earlier in the week. Analysts expect the stock price to struggle in the short term. Despite the scandals, demand for Nvidia's advanced chips remains high, with market analysts predicting little impact on near-term sales.

Huang, known for his hands-on involvement in product architecture and engineering decisions, played a crucial role in steering the company for over three decades. However, Nvidia's deep expertise in chip design and software, along with its strong relationships with AI hyperscalers and foreign governments, may help mitigate the impact of Huang's departure.