Why Did Jensen Huang Resign So Fast? 5 Possible Reasons Behind Nvidia CEO's Sudden Exit After 33 Years

Just four days after Nvidia Corp.'s board publicly expressed confidence in Jensen Huang, the co-founder who built the company into a $4 trillion AI giant was gone.

Nvidia announced Thursday that Huang had resigned as president, chief executive and a member of the board, effective immediately. Chief Financial Officer Colette Kress was named interim CEO, and longtime director Harvey C. Jones became the company's first board chair.

The speed of the exit stunned investors. On Sunday, the board said it had confidence in Huang and his leadership team. By Wednesday night, it had accepted his resignation, according to a regulatory filing.

Nvidia has not given a reason for the resignation. Its filing with the Securities and Exchange Commission describes no disagreement between Huang and the board. The company thanked Huang "for his immeasurable contributions to the company and the industry."

Based on reporting and analyst commentary, here are five possible reasons the end came so quickly.

1. A second relationship, this time with a direct report

The turning point appears to have come Wednesday afternoon. The New York Times reported that Huang had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reported directly to him.

That report changed the nature of the scandal. Huang's earlier admitted affair involved Alice Huang, an executive at an outside company. A relationship with a subordinate raises questions about workplace conduct and corporate governance.

Nvidia's code of conduct directs employees to avoid situations that could create conflicts of interest, including personal relationships. Many U.S. companies strictly limit romantic relationships between executives and employees who report to them. Former Intel CEO Brian Krzanich and former McDonald's CEO Steve Easterbrook both lost their jobs over workplace relationships.

Within hours of the Times report, The Wall Street Journal reported that Nvidia's board was preparing to oust Huang. Nvidia, Huang and Powell have not confirmed the Times report.

2. Resigning before being fired

The board appeared ready to act. Under Nvidia's bylaws, a majority of its 11 directors could remove Huang "with or without cause." Unlike many tech founders, Huang held no super-voting shares that could protect his position. He owns about 3.5% of the company.

Resigning rather than being fired can allow an executive to leave on more negotiated terms. Corporate governance experts say the difference between "resigned" and "ousted" often matters in separation agreements.

Wedbush analyst Dan Ives said the board "had no choice," according to CNN. He said Huang's resignation "ends the dark chapter" for Huang and Nvidia.

3. National security pressure from Washington

Huang faced growing pressure from lawmakers over his relationship with Alice Huang, a former executive at Singapore-based Nvidia customer Megaspeed whom U.S. officials suspect of being a Chinese intelligence asset. China has denied the spying allegations.

Republican Sen. Kevin Cramer of North Dakota had called on Huang to step down, telling Politico that "the potential for extortion is so tremendous."

Three Republican House committee chairs asked Huang to attend a closed-door briefing on Nov. 18 and threatened a subpoena if he refused. The Justice Department has also opened an inquiry, according to LiveNOW from FOX.

A source told NBC News that the White House was aware of the board's Wednesday meeting.

For a company whose chips are central to U.S. technology and national security policy, the political pressure became difficult to ignore.

4. A stock collapse and earnings next week

Nvidia lost about $600 billion in market value this week, including after-hours losses Wednesday, according to Reuters. Its shares fell again Thursday, trading around $159 after the announcement, down more than 8%.

The company is scheduled to report fiscal third-quarter earnings on Tuesday, Nov. 17. A prolonged leadership fight could have overshadowed the report and unsettled customers.

By settling the leadership question quickly, the board signaled stability. "We expect the company's operations, customer commitments and product roadmap to continue without interruption," the board said.

Huang himself has a large financial stake in a quick resolution. His Nvidia shares were worth about $150 billion before Thursday's selloff.

5. Legal exposure and chip smuggling questions

Nvidia faces a securities lawsuit accusing it of failing to tell investors about Huang's relationship with Alice Huang, CBS News reported.

The scandal also renewed scrutiny of Megaspeed, which bought nearly $5 billion worth of Nvidia chips. U.S. and Singapore authorities have investigated whether chips it bought were diverted to China in violation of U.S. export controls. Megaspeed has denied wrongdoing, and Nvidia previously said it found no evidence of chip diversion.

The board's independent investigation, led by former acting U.S. Attorney Joon H. Kim and the law firm Wachtell, Lipton, Rosen & Katz, is continuing. Huang's departure may help the company separate itself from the investigation's findings, whatever they turn out to be.

Nvidia's announcement did not address the status of the investigation.

What's next

Huang, 63, apologized to employees and his family in a Nov. 8 memo.

"I was unfaithful to my wife," he wrote. "My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry."

The board said it will consider internal and external candidates for a permanent CEO. Kress will lead the company through next week's earnings report while continuing as CFO.

Huang has not said what he plans to do next. SpaceX CEO Elon Musk said before the resignation that hiring Huang "would be an honor," but there is no indication the two have discussed a role.

This article is for informational purposes only and does not constitute investment advice.