Nvidia (NVDA) lost its co-founder on Thursday when the board announced that Jensen Huang had resigned as president, CEO and director, effective immediately, ending a 33-year tenure that turned a graphics-card startup into the central supplier of the AI boom and sending shares down more than 10% premarket.
The premarket drop extended a slide that had already erased roughly $600 billion in market value this week, compressing Nvidia's forward earnings multiple to about 12 times, the lowest in over a decade. That is a stunning discount for a company whose demand still exceeds supply, and it suggests investors are pricing leadership risk rather than any collapse in AI demand.
Longtime CFO Colette Kress will serve as interim CEO while keeping her finance duties, and the board will consider both internal and external candidates for the permanent role.
Former Synopsys (SNPS) chief Harvey Jones becomes Nvidia's first-ever board chair, a governance overhaul that accompanies the abrupt change at the top.
How the Board's Backing Collapsed
The exit followed a rapid escalation that began when Huang admitted an extramarital affair with a Megaspeed executive whom U.S. intelligence suspects of being a Chinese asset.
Days later, reports surfaced of a second relationship with Kimberly Powell, a direct report. That revelation reversed the board's earlier public backing, an unprecedented turn for a founder-CEO who had come to personify the AI trade.
The board's swing from public support to accepting Huang's resignation took only days, a dramatic reversal by any corporate-governance standard.
Is Kress the Right Bridge for NVDA?
Kress is a sensible stabilizing choice because she owns the company's guidance, including roughly $108 billion in third-quarter revenue, and has the trust of investors.
That continuity matters because the guidance rests on demand that still outstrips supply, which is the one pillar of the bull case the scandal has not touched.
However, her finance background means the market will likely keep discounting the stock until a product-minded successor emerges. Names floated so far include internal candidate Ian Buck, Apple (AAPL) alum Johny Srouji and Arm Holdings (ARM) CEO Rene Haas.
The Risks Stretch Well Beyond the C-Suite
Nvidia also faces a shareholder class action, congressional and FBI scrutiny, and potentially tighter China export policy, a sensitive overhang given the alleged intelligence link.
Any tightening of export rules would hit a company whose valuation has already compressed to its lowest multiple in more than a decade.
The heaviest exposure, though, may sit in the Nvidia-financed customer ecosystem, where neocloud names are already falling. Meanwhile, rivals Advanced Micro Devices (AMD) and Broadcom (AVGO) are gaining as investors seek AI exposure without the governance baggage.
The Next Catalyst to Watch
The November 17 earnings call is now the critical test of whether demand that still exceeds supply can anchor sentiment amid the leadership upheaval.
Until then, the board's search, and whether it favors a product-minded leader over a finance steward, is likely to drive trading in NVDA.
If Kress delivers on the guidance she owns, a 12-times multiple may look less like a verdict on Nvidia's business and more like a referendum on who will run it.
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On the date of publication, Sarah Holzmann did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.