The departure of Jensen Huang, the 63-year-old cofounder who became the public face of Nvidia and, by extension, much of the modern artificial intelligence industry, has sent shockwaves through Silicon Valley. Chief financial officer Colette Kress has taken over on an interim basis while the board searches for a permanent successor, and what happens next at one of the world's most valuable companies is expected to reverberate far beyond the technology sector.
Nvidia is valued at nearly $4 trillion and controls close to 90 percent of the market for advanced AI chips used to train frontier models, counting Microsoft, Google, Amazon and Meta among the customers that rely on its hardware to build and run AI data centres. With AI and technology companies making up roughly 40 percent of stock market valuations, the turmoil has wiped hundreds of billions of dollars from Nvidia's market value and dragged down both the S&P 500 and the Nasdaq.
The crisis began on October 29, when The New York Times reported that US intelligence agencies suspected Alice Huang, a Chinese businesswoman and executive associated with Singapore-based AI infrastructure company Megaspeed International, had been tapped by China's Ministry of State Security to gather information from the Nvidia chief. The newspaper said the two were in an intimate relationship, which Huang later confirmed in an internal memo, and Nvidia's board opened an independent investigation into whether he had been targeted by a foreign intelligence operation. "I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry," Huang wrote to staff.
The concerns extend beyond the personal. Megaspeed purchased more than $4.8 billion worth of Nvidia chips over roughly two years, and The Information separately reported that Alice Huang facilitated at least $7.5 billion in Nvidia chip shipments to Chinese firms, raising further questions about the skirting of US export controls. On Wednesday, the Times reported a second alleged affair, this time with Kimberly Powell, Nvidia's vice president of healthcare, who reported directly to him. Huang was forced out of the company and off its board the following day, and hours later Reuters reported an alleged third affair with another Nvidia employee, citing two people familiar with the matter.
Beijing has pushed back against the fallout. A Chinese foreign ministry spokesperson said China has "always opposed the abuse of export control measures" and dismissed allegations that Alice Huang is a spy as "baseless". Chinese investors have nonetheless been offloading shares in AI-linked companies over fears the episode will deepen the technological divide between Beijing and Washington: on Friday, shares in Z.AI, one of China's leading AI model developers, fell more than 10 percent in Hong Kong, while rival MiniMax hit record lows. A Reuters review also identified more than $3 billion in Chinese computing projects built around Nvidia's restricted processors, stretching from wealthy coastal technology hubs to remote western provinces, despite US export controls that Washington imposed over national security concerns, including potential military applications.
Nvidia shares rose 1.8 percent in premarket trading on Friday after shedding around 11 percent earlier in the week through Thursday, the day Huang exited the company he built. The company remains on course for its longest streak of weekly losses since October 2012. Shares in Nvidia customers such as South Korea's Naver dropped more than 5 percent, while Nasdaq and S&P 500 futures slipped 0.4 percent and 0.15 percent respectively. The turbulence comes as US President Donald Trump prepares to meet Chinese President Xi Jinping next week at the APEC leaders' summit in Shenzhen.
"Jensen has obviously been a singular force in many ways so the impact will likely be felt far and wide," UBS analyst Timothy Arcuri told Reuters, noting that Nvidia has become a key source of funds for AI industry participants including neo-clouds, LLM developers, ecosystem partners and suppliers. He warned that even if a new leader maintains a similar approach, there is likely to be some "pause" in the company's willingness and ability to pursue such deals in the near term.
Huang, who spent years lobbying Washington against chip restrictions on the grounds they would surrender a strategically important market to Chinese competitors, led Nvidia for nearly 33 years, a journey from washing dishes at a Denny's to building a $4 trillion giant. His abrupt removal has exposed the absence of a clear succession plan, a risk Nvidia itself flagged in this year's annual review, which noted the company is "highly dependent on the services of our longstanding executive team" and warned that failures in succession planning could hinder its long-term success.
The board has begun its search and says it will consider candidates from both inside and outside the company. Trump, who has defended Huang as a "genius", offered his own suggestion, floating former Apple chief executive Tim Cook for the role. "A Legend replaces a Legend," Trump wrote.
