Nvidia Stock Plunges Over 10% as Jensen Huang Quits After Affair With Suspected Chinese Spy, Kress Takes Over

Nvidia Corp. shares plunged more than 10% on Thursday after co-founder Jensen Huang resigned as chief executive. His departure followed revelations that he had an affair with a woman U.S. officials suspect of being a Chinese spy and a reported relationship with a senior Nvidia executive.

Nvidia's board said Huang had resigned as president, chief executive officer and a member of the board, effective immediately. The announcement ended his 33-year run leading the company he co-founded in 1993.

Chief Financial Officer Colette Kress will serve as interim CEO while also continuing as CFO. The board said it will search for a permanent replacement and consider both internal and external candidates.

Nvidia also named longtime director Harvey C. Jones as the company's first-ever board chair, a major change in governance at a company that for decades relied on Huang.

Shares tumble

Nvidia shares fell more than 10% in early trading Thursday. Before the opening bell, the stock had fallen 11.33% from Wednesday's close of $173.73 to $153.77, according to Finbold.

The selloff came on top of an 8% to 9% drop in after-hours trading Wednesday, after The Wall Street Journal reported that the board was preparing to oust Huang. Nvidia shares had already fallen about 11% over the previous five trading sessions, and the stock has now turned negative for the year, according to Fast Company.

The decline weighed on the broader market. The S&P 500 fell 0.6% and the tech-heavy Nasdaq Composite dropped 0.9% early Thursday, reversing part of Wednesday's chip-led rally. The Dow Jones Industrial Average was little changed.

Nvidia has long been at the heart of the artificial intelligence investment boom that has powered the stock market. Its extensive investments in and partnerships with other AI companies add to uncertainty about how far the fallout could spread.

Leadership statements

Jones praised Kress, a veteran of more than a decade at Nvidia.

"Colette has helped lead NVIDIA through a period of extraordinary growth and has a deep understanding of our business, customers, operations and financial position," Jones said.

Kress pledged continuity. "I am committed to building on the extraordinary foundation Jensen created over the last 33 years," she said.

The board thanked Huang for his contributions to the company. Its announcement did not say what the investigation had found or whether Huang would keep cooperating with it after leaving.

Nvidia has not publicly established that Huang disclosed confidential information or that any foreign intelligence effort compromised company technology.

How the scandal unfolded

The crisis began Oct. 29, when The New York Times reported that U.S. intelligence officials believe Alice Huang, a former executive at Singapore-based Nvidia customer Megaspeed, is a Chinese intelligence asset who formed a close relationship with the Nvidia CEO. The two are not related. China has denied the spying allegations.

Megaspeed bought about $4.8 billion worth of Nvidia chips and has faced investigations in the United States and Singapore over whether those chips reached China in violation of U.S. export controls. Megaspeed has denied wrongdoing.

On Nov. 8, Huang admitted to being unfaithful to his wife in a memo to employees.

"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 same day, Nvidia's board launched an independent investigation, led by former acting U.S. Attorney Joon H. Kim and the law firm Wachtell, Lipton, Rosen & Katz, into whether Huang was the target of a foreign intelligence effort. At the time, the board said it had confidence in Huang and his leadership team.

The situation worsened Wednesday, when The New York Times reported that Huang also had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reported directly to him. Nvidia and Powell did not respond to requests for comment about that report.

Hours later, the board met to decide Huang's future. A source told NBC News that the White House was aware of the meeting.

The Justice Department has also opened its own inquiry, according to LiveNOW from FOX.

Pressure from Washington

Several Washington officials had called for greater scrutiny of Nvidia and for Huang to testify about his relationship with Alice Huang. Three Republican House committee chairs asked him to attend a closed-door briefing on Nov. 18 and threatened a subpoena if he refused.

It is unclear whether Huang will still appear now that he has left the company.

A founder's fall

Huang, 63, built Nvidia from a maker of video-game graphics cards into the world's dominant supplier of AI chips. Before the scandal, Nvidia was worth more than $4 trillion and ranked among the world's most valuable companies.

His leather jackets and energetic keynotes made him the face of the AI boom, and he became a close adviser to President Donald Trump on semiconductor policy.

Huang still owns more than 3% of Nvidia's stock, a stake worth about $150 billion before Thursday's trading, according to PCWorld.

Kress takes over at a critical moment. Nvidia is scheduled to report fiscal third-quarter earnings on Tuesday, Nov. 17, which will be closely watched for signs of whether the leadership upheaval is affecting customers and demand.

Analysts have said finding a permanent successor will be difficult. Huang had dozens of direct reports and no publicly named successor. Bloomberg previously reported that the board was working with an outside firm to identify candidates.

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