Nvidia shares extended their decline in after-hours trading on reports that the company's board is considering removing CEO Jensen Huang, a move that would mark one of the most dramatic leadership changes in recent corporate history. The stock, which had recovered during Wednesday's regular session, fell to $158 in extended trading, its lowest level in months, and is now 34% below its all-time high, officially entering bear market territory.
Board deliberations and allegations
According to the Wall Street Journal, Nvidia's board is meeting to discuss Huang's future after he admitted to an extramarital affair with an employee and to a relationship with Alice Huang, a Chinese national linked to a Singapore-based firm. Reports have also surfaced that Huang's personal ties may be connected to $7.5 billion in chip shipments to China, a market that has become a focal point for regulators.
Huang, who owns less than 10% of the company, has seen his net worth drop by over $23 billion in the past year, according to Bloomberg. The board's ability to remove a founder-CEO is plausible given his minority stake, but the lack of a clear succession plan adds significant uncertainty.
Succession and strategic risks
The potential ouster poses a major risk to Nvidia's operations. Huang has led the company for over three decades and is widely regarded as a visionary in the semiconductor industry. With no apparent heir apparent, investors are left guessing who could step in. Speculation has centered on CFO Colette Kress as a likely interim CEO, but her experience is financial rather than technical.
Beyond leadership, the allegations could trigger deeper investigations, particularly with Democrats gaining ground in the midterm elections. Analysts at Culper Research estimated in May that China accounts for about 20% of Nvidia's sales, though the company has consistently stated it generates no revenue from China in recent filings. A formal probe into these shipments could add regulatory pressure.
Historical parallels and market outlook
History shows that companies can survive—and even thrive—after removing a founder. Apple's board fired Steve Jobs in 1985, only to rehire him in 1997, leading to the iPhone era and its rise to the world's most valuable company. However, Nvidia's situation differs, as it lacks a proven successor and faces a rapidly evolving AI chip market.
Looking ahead, Nvidia shares will remain highly sensitive to board decisions and next week's earnings report, which is expected to show revenue reaching $108 billion, according to Yahoo Finance. The results could provide clarity on whether the company's growth trajectory remains intact despite the leadership turmoil.
From a technical perspective, the stock has broken below its key support level of $164, the March low, and is trading under all major moving averages. This suggests further downside is possible if the board's decision or earnings disappoint.
This article is for informational purposes only and does not constitute financial advice.
