Nvidia chief executive Jensen Huang has resigned amid a widening scandal over workplace relationships, thrusting the world's leading maker of artificial intelligence chips into an unexpected succession search. Shares of the company fell about 5% in afternoon trading on Thursday, though they recovered from early morning lows near $149 apiece.
The New York Times reported Wednesday that Huang had an affair with an executive who reported to him, and Reuters reported Thursday that he had an intimate relationship with a second employee, citing unnamed sources. The mounting scrutiny has left investors and employees weighing who can lead the company forward.
The broader market showed resilience on Thursday, with the S&P 500 down about 0.25% in afternoon trading. Energy, communication services, utilities, consumer staples and consumer discretionary stocks outperformed, while materials, industrials and information technology lagged.
Huang's exit may help explain why large cloud companies with their own internal chip programs outperformed in Thursday's session. Google parent Alphabet, known for its tensor processing units, rose around 2%, while Amazon, which has found success with its Trainium chips, gained roughly 0.6%.
Attention quickly turned to succession. The CNBC Investing Club with Jim Cramer, a longtime Nvidia shareholder, said it views chief financial officer Colette Kress as a rigorous and respected leader who is more than capable of keeping the company on the right path and advancing its AI roadmap, calling her a strong choice for interim chief executive.
Among internal candidates, Ian Buck, Nvidia's vice president and general manager of hyperscale and high-performance computing and the inventor of its linchpin CUDA software, is seen as a favorite. Cramer floated Buck on Tuesday's "Mad Money," but said that after learning more about Huang's relationships over the past 36 hours, an outside candidate may be more appropriate to clean up the mess.
President Donald Trump suggested Thursday that former Apple CEO Tim Cook take over, though the Investing Club said it was not sure Cook would be the best fit for the chipmaker. The leaders of the cloud units at Alphabet and Amazon have also been mentioned as possible candidates, and Palo Alto Networks CEO Nikesh Arora's name was floated on "Squawk on the Street." Palo Alto shares fell 3% on Thursday.
Elsewhere in markets, oil prices moved higher after Trump wrote on Truth Social that the United States does not need to make a deal with Iran, saying "we've got their Strait," a reference to the Strait of Hormuz. Bond yields spiked again following Tuesday's hot consumer price index report, and traders began pricing in the possibility of a 50 basis point rate hike at the Federal Reserve's policy meeting next month.
The Investing Club said Nvidia's stock is less attractive than it was a week ago, but argued that the company's technology roadmap has not changed overnight and that its products remain best in class. Cramer advised investors sitting on extraordinary gains to trim their positions as a matter of portfolio discipline.
After Thursday's closing bell, Cisco Systems and Applied Materials are set to report quarterly results. No major earnings are scheduled for Friday morning, when the October producer price index report is due.
