Nvidia shares plummeted roughly 14% from Wednesday's closing price following Jensen Huang's resignation as CEO on Thursday, with the stock hitting an intraday low of $148.80 per share before recovering some losses to trade down 4.3% by early afternoon. Huang, who co-founded Nvidia in 1993, resigned after reports emerged of two extramarital affairs, including a relationship with a Chinese businesswoman whom U.S. authorities suspect of spying for Beijing, which prompted a board investigation. The company announced that chief financial officer Colette Kress will serve as interim CEO.
Analysts highlighted the magnitude of Huang's role in Nvidia's rise and the uncertainty his departure creates. Bret Kenwell, investment analyst at eToro U.S., said Huang's leadership made Nvidia the "crown jewel of the AI trade" and he was "more than a CEO - he was part of the investment thesis." Kenwell noted that Nvidia's earnings report next week will face heightened scrutiny as shareholders and AI investors seek stability amid the uncertainty and look for "a fresh read on demand and a reason to regain confidence."
Dan Ives, partner and senior managing director at Yorkville Ives, said Huang's resignation marks the end of the perception that he was the "Godfather of AI, the rock star viewed as the face of the AI boom." Ives maintained that despite the leadership change, Nvidia remains "the clear leader in GPU chips for the AI Revolution" with a lead of "roughly 2-3 years ahead of the nearest competitor." Yorkville Ives has a price target of $225 a share and an outperform rating for Nvidia stock.
James McCann, senior economist for investment strategy at Edward Jones, cautioned that tech and AI market segments have grown increasingly volatile, with the Nasdaq delivering gains or losses exceeding 1% in seven of the past 10 trading days. McCann noted that "uncertainty around the leadership of Nvidia risks adding to this sharp price action given Huang's important role as a face of the AI boom, the lack of a clear succession plan at Nvidia, and the financial role this huge company has played in backing other parts of the AI sector." He advised investors to "avoid over-concentration risks among tech companies" and instead maintain "a well-diversified exposure across large and midcap U.S. stocks."
Ives added that the company already has a strategic roadmap built around its next family of chips and noted that scrutiny related to business dealings with China and export controls represents a headwind "already being factored into the stock at current valuation."