'Even incredible humans make mistakes': Wall Street reacts to Nvidia scandal
The key question is whether Jensen Huang will survive as CEO of the chipmaker he cofounded
Nvidia’s board has launched an independent investigation into whether CEO Jensen Huang was targeted by Chinese intelligence / Photo: jamesonwu1972 / Shutterstock.com
Nvidia shares plunged almost 9% in early trading Monday before paring losses after the chipmaker’s board launched an independent investigation into whether CEO Jensen Huang had been targeted by Chinese intelligence. The investigation followed media reports of his relationship with Chinese businesswoman Alice Huang, who shares his last name. Huang admitted he had been unfaithful to his wife and said he would cooperate fully with the investigation.
The scandal has raised questions about how Nvidia will be run in the weeks ahead and whether Huang will stay on following the investigation. “Global markets must confront a terrifying reality: The AI ecosystem's first ‘too big to fail’ executive is suddenly vulnerable, and there is no backup plan if he is forced to step down,” Axios wrote.
What are billionaires, investors, and Wall Street analysts saying about the scandal?
Bill Ackman, CEO of Pershing Square Capital Management
The billionaire wrote on X that “even incredible humans make mistakes,” adding that Huang was taking full responsibility, as he should, and that everyone should support him and his family. “I am not suggesting he gets a free pass. If indeed this is more than an affair, then it is an obviously a real problem,” Ackman wrote in a follow-up.
Gary Black, money manager at the Future Fund LLC
“I doubt Jensen Huang will be able to remain as (Nvidia) CEO. This could put short-term pressure on the stock of the second most valuable company in the world. He has no natural successor within the company. [...] Many portfolio managers will reduce their (Nvidia) holdings in the coming weeks as a result of uncertainty over who could succeed Jensen,” Black said, according to Reuters.
Jay Goldberg, Seaport Research analyst and the lone Nvidia bear
The outcome of Nvidia’s investigation remains unclear, but Goldberg expects it to “become a longer-lasting problem for the company,” MarketWatch reports. He said the allegations would likely distract the management for weeks, taking its focus away from running the company. He also expects Nvidia’s ability to do business in China to remain in question.
Stacy Rasgon, Bernstein analyst
Rasgon said coverage of the scandal would be “a heavy distraction” at best and could give both Democrats and Republicans in Congress “significant ammunition” to tighten rules on data center construction, according to MarketWatch. China would benefit if Huang were removed as CEO, Rasgon said.
Shaun Maguire, partner at venture capital firm Sequoia Capital
“One, Jensen is one of the greatest entrepreneurs of this generation; two, he did something incredibly dumb; three, it was bad for America; four, but my guess is there was no bad intention; five, two mistakes don’t make a right, and I believe Jensen is irreplaceable for America’s AI leadership,” Maguire wrote on X.
Mohamed El-Erian, former PIMCO CEO
“While Nvidia has sought to reassure us all, there are several layers here, beginning with the unfortunate timing. For example: The company is systemically important for tech, markets and the economy; Investors tend to struggle to price in key-person and governance issues; and there are fluid national security and geopolitical dynamics,” El-Erian wrote on X.
Josh Gilbert, lead analyst at eToro
“This boardroom storm has landed at a brutal time for the AI trade, but Nvidia’s earnings on November 17 are the real next test. While the investigation is likely to dent sentiment, it won’t alter anything long-term, unless it leads to a change at the top, at which point it becomes a completely different ball game,” Gilbert said, according to Reuters.
Chris Weston, head of research at Pepperstone
“Will Huang get replaced? No, I don't think that's going to happen. I think given that he is like the godfather of AI and, you know, the OG of what has been the biggest investment thematic that we've seen in a generation, I mean, I think if we genuinely thought he was going to step down... the stock would be down – it would be an absolute bloodbath, to be honest,” Weston said, according to Reuters.
Atif Malik, Citi analyst
“For investors, key issues are likely potential governance implications, increased regulatory scrutiny and export-control compliance of the flow of H200 chips into China (less than 1% of data center sales) and routed through other intermediaries, and (long-term) impact on leadership stability.”
Donald Trump, U.S. president
“I have not spoken to him about it. I just know he's a fine person, but you never know what is going on. I hope everything's fine... I think he's an honorable guy,” Trump said, according to Reuters.
