In the past 33 years, Jensen Huang, the CEO of Nvidia, has achieved a remarkable stock return of over 700,000%, thanks to his unique management style and exceptional business negotiation skills. However, this astonishing success has also made him an irreplaceable figure within the company. This week, a scandal involving Huang’s alleged extramarital affair, linked to a female spy associated with the Chinese Communist Party, has brought renewed global attention to Nvidia’s lack of a succession plan.
According to reports from Bloomberg, Huang’s office is uniquely designed: he sits at a large oval desk facing his core team of subordinates, with tiered seating behind them to accommodate more employees. This layout at Nvidia’s headquarters in Santa Clara, California, was specifically created to align with Huang’s management style. Every significant decision within the company requires his direct involvement, and he personally oversees even the minutiae of business operations. Huang has around 60 direct reports, a number that exceeds the industry average for technology sector leaders. These subordinates frequently send him emails outlining their “Five Most Important Items,” which Huang reviews and responds to at any hour, day or night.
Since the company’s founding, Huang has been at the helm of Nvidia, making him the longest-serving corporate leader in Silicon Valley. Despite Nvidia growing into one of the most influential companies in the world, with a staggering stock return of over 700,000%, there remains no apparent successor within the organization.
This week, the scandal surrounding Huang has further highlighted the critical issue of Nvidia’s lack of succession planning. The ongoing crisis underscores how inextricably linked the 63-year-old CEO’s success is to that of Nvidia, a sentiment Huang himself has acknowledged.
In a recent interview with Bloomberg reporters, he stated, “It is my management style that has allowed the company to thrive. I aim to create an organization that can adapt to changes, proactively drive transformation, and respond to shifts in the external environment.”
Should Huang step down, the impact would extend far beyond Nvidia’s internal operations. This is not only due to Nvidia’s dominance in the critical chip market that supports the AI boom but also because Huang is a highly skilled business negotiator. He has leveraged the company’s robust resources to invest in AI supply chains and various startups. Furthermore, he is one of the most proactive advocates for the AI revolution, seeking to downplay concerns about potential threats from AI while emphasizing the myriad benefits that this technology can offer.
In recent years, Nvidia has become the largest single driver of the S&P 500 index’s growth, propelled by explosive sales growth. The company’s revenue for the current fiscal year is expected to exceed $400 billion, a sharp increase from less than $27 billion four years earlier. This growth trajectory surpasses the achievements of industry icons like Steve Jobs, Bill Gates, and Jeff Bezos. Simultaneously, Huang has managed to maintain a gross profit margin of over 70%, which is astonishing within the semiconductor industry.
Recent media reports have suggested that the woman involved in Huang’s affair may have been conducting espionage for the Chinese government. In response to these allegations, Nvidia’s board of directors has launched an independent investigation. However, the company is currently grappling with a more pressing concern: what would happen to Nvidia if it were to lose this pivotal leader—no matter how unlikely that scenario may seem?
The “key-man risk” faced by Nvidia is extraordinarily high and quite rare in corporate history. This term refers to the risks associated with a company’s over-reliance on a singular individual.
Bloomberg cited remarks from Stacy Rasgon, a senior chip analyst at Bernstein, who stated, “Nvidia is not an ordinary company, and Jensen Huang is not an ordinary CEO.”
An insider reportedly informed Bloomberg that, even as Nvidia conducts an independent committee investigation, the board hopes to keep Huang in his position as CEO for as long as possible.
Daniel Morgan, a fund manager at Synovus Trust Co., which holds Nvidia shares, commented, “Nvidia has experienced rapid growth in a very short time, and perhaps they are not fully prepared for this. Companies like Microsoft and Apple seem to always have a CEO ready to step in, but Nvidia appears to have been heavily reliant on its founder.”
Ken Mahoney, head of Mahoney Asset Management and an Nvidia investor, added, “You absolutely do not want to see Jensen being removed as CEO. He is an extremely important figure for the tech industry and the development of AI infrastructure.”
Another Nvidia shareholder, Ross Gerber, head of Gerber Kawasaki Wealth and Investment Management, expressed a 75% likelihood that Huang would continue as CEO.
“I don’t believe anyone will cancel chip orders because of this issue,” Gerber stated.
According to Yahoo Finance, should CEO Jensen Huang be forced to step down, the valuation of Nvidia—once ranked the highest in global market cap—could see a significant drop.
Dan Ives, a partner at Yorkville Ives and a seasoned tech analyst, remarked, “We believe that if Huang were to step down, the value of Nvidia as a company (and its stock) would take a substantial hit (between 25% and 30%). This would not only alter the company’s future direction but would also significantly change the competitive landscape in the AI GPU market in the U.S. and globally, particularly in China.”
Ives further emphasized, “Huang is the core ‘gene’ of Nvidia; the success of Nvidia in the AI space and its ambitious vision are closely tied to whether he can continue as CEO. He is irreplaceable—there is no one in the current management team who can seamlessly step into his role. This underlines the ‘key-man risk’ that Nvidia currently faces, a factor that investors will consider when evaluating Nvidia’s stock.”
On November 9, Nvidia’s stock fell by 4.27%, followed by a further decline of 5.53% the following day.