Nvidia ousts Jensen Huang as CEO. Wall Street had called it the worst-case scenario.
Nvidia shares plunged 11% after the departure of its founder, whom analysts have called "irreplaceable"
Jensen Huang / Photo: jamesonwu1972 / Shutterstock.com
Nvidia CEO Jensen Huang is stepping down following reports of two extramarital affairs, including one with a woman U.S. intelligence agencies suspect of working for Chinese intelligence.
“Jensen Huang has resigned as President, Chief Executive Officer, and a member of the Board, effective immediately,” the company stated on Thursday. CFO Colette Kress will serve as interim CEO until the board names a permanent successor.
Nvidia shares plunged more than 11% in premarket trading in New York. The chipmaker is due to report third-quarter results in less than a week, on November 17. Futures on the tech-heavy Nasdaq 100 fell 1%.
Jensen’s contributions to NVIDIA are profound. NVIDIA is one of the most consequential technology companies in the world. The Board and the company thank Jensen for his immeasurable contributions to the company and the industry.
What Wall Street is saying
After Huang acknowledged on Sunday that he had been unfaithful and Nvidia opened an internal investigation, analysts saw a forced exit as possible but unlikely. On Tuesday, Jordan Klein, an analyst at Japanese bank Mizuho, said investors viewed Huang as “irreplaceable.” Indeed, Wall Street had called Huang’s potential departure the worst-case scenario.
“We believe that Jensen Huang’s removal as CEO would be an extremely undesirable scenario,” said Ken Mahoney, CEO of Mahoney Asset Management. He said the stock would be in an even tougher position if Huang were forced to exit.
“Depending on the circumstances, Nvidia’s stock could plummet by 10-30%,” said Yegor Tolmachev, a senior equity analyst at Freedom Broker. Jay Goldberg, an analyst at Seaport Research Partners, predicted a 20% drop.
Amid the uncertainty, Morgan Stanley strategists have dropped Nvidia from their list of top picks. Six banks and investment houses have downgraded the stock. Bernstein has halved its target price to $200 per share from $400 per share.
