Nvidia CEO Jensen Huang Resigns; CFO Colette Kress Named Interim Chief

Key points

• Nvidia said on Thursday 12 November that Jensen Huang has resigned as president, chief executive and board member, effective immediately.
• Chief financial officer Colette Kress is interim CEO and keeps her finance role, and Harvey C. Jones becomes the board's first chair.
• The company gave no reason. The board is searching for a permanent CEO and will consider internal and external candidates.
• Shares fell 4.3% on the day after sinking more than 13% at the open, and the stock closed just above a $4 trillion market value.
• Nvidia says its third-quarter results are still due on Tuesday 17 November.

What Nvidia announced

In its announcement, the company said Huang resigned from all three roles he held. Kress, who joined Nvidia in 2013 after nearly 25 years in finance at technology companies including Cisco and Microsoft, will lead the company until a permanent successor is named. Jones, a technology executive and investor who previously ran Synopsys, takes the newly created chair post.

Jones said the board has full confidence in Kress and expects operations, customer commitments and the product roadmap to carry on without interruption. Kress said Nvidia will keep building on the foundation Huang created over 33 years. Huang is not quoted in the release.

Why now

Nvidia's release does not explain the departure, but it follows a rough week for the company. CNBC reported that the board said on Tuesday it had hired the law firm Wachtell Lipton to investigate allegations about Huang's relationship with a businesswoman. The New York Times has reported that US officials concluded she was a Chinese intelligence asset. CNBC said Huang apologised on Sunday for being unfaithful to his wife but gave no details, and that a person familiar with the matter said the board decided on Wednesday night to remove him after further reports. Nvidia has not confirmed those details, and some of the reporting rests on anonymous sources.

The market reaction

Nvidia shares hit a new 52-week low early in the session, falling more than 13% at the open and dipping below $4 trillion in market value, before recovering most of the loss to close down 4.3%, CNBC reported. The company has lost about $2 trillion in value from its 6 October peak, and more than $740 billion since last Friday's close.

Analysts were divided on what it means. CJ Muse of Cantor Fitzgerald cut his price target from $350 to $250 while keeping an overweight rating, calling Huang's exit a major loss for Nvidia. Stacy Rasgon of Bernstein said it is hard to argue for buying in size given the chance of further allegations. John Vinh of KeyBanc said the departure justifies a higher risk premium, while Jeremiah Buckley of Janus Henderson said it could prove a clearing event for the company.

Beyond chips

The shake-up spilled into other markets. The Nasdaq and the S&P 500 fell with Nvidia, according to Eurasia Business News, and crypto, which has tended to trade with large technology stocks, slid as well, with Altcoinbuzz and Bitcoin.com News both citing the leadership change among the pressures on Bitcoin.

What to watch

The first test is the earnings report on 17 November, which Nvidia says will go ahead as scheduled, followed by the search for a permanent chief executive. Huang's stake of about $140 billion is largely held in trusts shared with his wife, according to SEC filings cited by CNBC.

This report is based on Nvidia's own announcement and on coverage by CNBC, Eurasia Business News, Altcoinbuzz and Bitcoin.com News.