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Original source: Wall Street Watch
NVIDIA is facing a severe crisis that may reshape the leadership structure of the world's highest market value artificial intelligence chip manufacturer. Due to CEO Jensen Huang being embroiled in multiple extramarital affairs scandals, the company's board is currently actively seeking potential successors to address the power vacuum that may arise.
According to reports from Bloomberg and The Wall Street Journal, the NVIDIA board held an internal meeting on Wednesday to decide Huang's fate and has collaborated with external agencies to select candidates for the new CEO, including the consideration of appointing an interim CEO. Previously, The New York Times revealed the latest about Huang's inappropriate relationship with a direct subordinate, further intensifying earlier serious allegations of an affair with a Chinese woman.
(The above image is generated by AI)
The uncertainty surrounding succession has rapidly triggered intense reactions in the financial markets. In after-hours trading on Wednesday, NVIDIA's stock price plummeted by as much as 9%, wiping out a huge market value in a single day and triggering widespread selling sentiment, dragging down other AI-related stocks such as Intel and Dell Technologies.
Polymarket data shows that the market's betting probability on Huang's departure or removal as CEO has skyrocketed. Currently, the probability of Huang departing before November 30, 2026, has risen to 86%; it escalates to 91% by December 31, 2026, to 92% by March 31, 2027, and reaches 93% by December 31, 2027.
With NVIDIA set to release its quarterly earnings report next week, this series of unexpected events has forced investors to confront unprecedented “key person risk.”
Wall Street is closely assessing the potential direct impact on the funding chain, client confidence, and development prospects of the entire AI industry if this key architect of AI infrastructure is forced to leave.
Independent Investigation and Board Facing Major Test
According to Reuters, NVIDIA's board initiated an internal investigation on Sunday to address national security concerns mentioned in news reports.
However, the company's governance structure is under strict scrutiny from the outside. Among NVIDIA's 11 board members, there is no designated board chair, and several independent directors (such as Mark Stevens) have been in office since the 1990s, resulting in a highly entrenched personnel structure.
Marc Goldstein, head of U.S. research at Institutional Shareholder Services (ISS), pointed out that while Wall Street generally grants Silicon Valley charismatic founders some leniency, due to Huang's judgment being questioned, the board must hire independent legal counsel to enhance the credibility of the investigation.
He suggested that the board consider allowing long-serving directors to recuse themselves from the investigation to prevent future legal challenges from shareholders. Former U.S. Department of Justice official Gil Soffer emphasized that if the investigation confirms that Huang concealed relevant relationships and engaged in misconduct, then his removal would be an appropriate decision.
Key Question: Did Huang Disclose Proactively?
One of the core focuses of the investigation is whether Huang disclosed this relationship to the company.
NVIDIA's code of conduct lists “personal relationships” as a scenario that may create conflicts of interest and explicitly requires employees to proactively contact the legal department for guidance when faced with potential or actual conflicts of interest.
Gil Soffer, a former U.S. Department of Justice official and chair of the law firm Katten, stated via email that if Huang fully and truthfully disclosed, it would be beneficial for his current situation as it would mean he did not conceal the relationship, and the board would have an opportunity to assess it and establish appropriate controls.
Soffer also pointed out that until more facts are disclosed, it is impossible to determine whether this relationship actually caused a conflict of interest, whether the board's handling has been appropriate, and to what extent Huang should be penalized. He stated that if Huang concealed the relationship and engaged in misconduct, "removal might be an appropriate course of action."
According to NVIDIA's latest proxy statement, Huang's total compensation over the past three years reached $120 million, primarily awarded in stock. The company's bylaws allow the board to remove him by majority vote, "with or without cause."
Wall Street Reevaluates "Key Person Risk"
Market analysts have expressed widespread concern about the potential leadership turmoil NVIDIA may face.
Haris Khurshid, chief investment officer of Karobaar Capital, pointed out that this is no longer just an isolated personal scandal but has evolved into serious governance and key person risk, with investors beginning to reprice the sentiment of the entire AI sector.
Joe Gilbert, portfolio manager at Integrity Asset Management, made it clear that this poses "undoubtedly negative impacts" for NVIDIA and the entire AI ecosystem, as it is nearly impossible for a successor to replicate Huang's strategic vision.
Michael O’Rourke, chief market strategist at Jonestrading, noted that NVIDIA previously predicted a 70% increase in sales this year, and under aggressive sales strategies and vendor financing models, a successor may need a whole year to "put out fires and clean up the mess."
Matt Maley, chief market strategist at Miller Tabak + Co, warned that as a significant financier in the AI industry, NVIDIA's upper management turmoil could lead to reduced spending across the entire sector. Zacks Investment Management's Brian Mulbe
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