Nvidia's board weighs Jensen Huang's future after a second relationship report

Nvidia (Nasdaq: NVDA) shares fell about 8% in after-hours trading on Wednesday, November 11, after the Wall Street Journal reported that the company's board was preparing to remove founder and CEO Jensen Huang, according to TechCrunch. The board has not announced a decision.

Three days earlier, the board opened an independent investigation into reports that Huang had been the target of a foreign intelligence effort, as FinanceInTime reported. The reporting since Sunday has moved from that inquiry to the question of whether Huang stays in the job.

From an apology on Sunday to a board meeting on Wednesday

On Sunday, November 8, the board said a committee of independent directors would oversee the investigation and that it had "no reason to believe that either national security or NVIDIA secrets were compromised," according to its statement. The same statement said: "The Board has confidence in Jensen and his leadership team and will provide further updates as appropriate."

Huang wrote in an email to employees published the same day: "I was unfaithful to my wife." He added that he supports the investigation "and will cooperate fully."

On Tuesday, November 10, the independent directors said they had retained Joon H. Kim, a former acting US Attorney for the Southern District of New York, and his firm Wachtell, Lipton, Rosen & Katz to run the inquiry, according to a second statement.

On Wednesday, the Journal reported that the board "could meet as soon as Wednesday to determine his fate," Fortune reported. The same day, the New York Times reported that Huang had also had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, according to Fortune. TechCrunch described her as an executive who reports to Huang. Fortune said Powell could not immediately be reached for comment.

What the reports say, and what Nvidia has not said

The reports on the board's plans rest on people the newspapers did not name. Al Jazeera said the New York Times, the Wall Street Journal and the Financial Times all reported that the board would discuss Huang's position. Nvidia did not immediately respond to Al Jazeera's requests for comment, the broadcaster said, and no company statement on the reports had appeared on Nvidia's newsroom at the time of writing.

Bloomberg reported that Nvidia is working with an outside firm to identify candidates who could replace Huang, according to TechCrunch. Fortune reported that Nvidia's board operates without a chair, that the company has no chief operating officer and has not set out a clear succession plan, and that Huang has about 60 direct reports.

A share price already under pressure

The size of the after-hours move differed by outlet. Al Jazeera put it at 8.6%, TechCrunch at about 8% and Fortune at more than 7%, each reported on Wednesday evening US time. TechCrunch said the stock was down about 11% over the previous five days.

Separately, three House committee chairs have asked Huang to brief their committees behind closed doors on November 18 about his interactions with Megaspeed executive Alice Huang, according to the House Foreign Affairs Committee. China's foreign ministry has denied the intelligence allegations, Al Jazeera reported.

The board, not the share price, now carries the risk

Our reading is that Nvidia's exposure here is less about a single quarter than about who holds authority over what the company builds and whom it sells to. The facts above describe a company organized around one person, with no chair, no chief operating officer and no published succession plan, facing a decision in days rather than months.

The threat is a rushed transition that unsettles the customers and suppliers whose spending plans run years ahead, and an interim structure that Washington and Beijing read as weaker. The opportunity is a board that uses the moment to publish a clear succession structure, which would answer a governance question investors have raised for years. We would weigh any board statement and the November 18 briefing request ahead of the after-hours price, and we would change this view if the board's findings show that the intelligence allegations touched customer or export decisions, which would make this a regulatory story, not a leadership one.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.