Nvidia's stock dropped 6.6% in premarket trading on Thursday as the company's board convened to decide the fate of CEO Jensen Huang. The meeting follows reports of Huang's two extramarital affairs, one with Alice Huang, an executive at cloud company Megaspeed, and another with Kimberly Powell, vice president of health care at Nvidia. U.S. intelligence officials suspect Alice Huang of being a spy for China, adding to the controversy.
Analysts warn that Huang's removal could cause Nvidia's stock to plummet another 20%, given his pivotal role in the company's success. Bernstein slashed its price target on Nvidia's stock by half, from $400 to $200. Stacy Rasgon, a senior analyst at Bernstein, noted that Huang's relationship with a direct report makes it difficult for the board to retain him.
Huang has been instrumental in Nvidia's transformation from a gaming hardware company to a leader in the AI boom. Rasgon questioned who could replace Huang as a visionary leader for the company's future. U.S. lawmakers have also called for Huang's resignation, increasing pressure on the board.
Richard Reyle, chief investment officer at Questar Capital Partners, described Nvidia's lack of a succession plan as making the stock 'uninvestable.' He suggested the company faces a choice between keeping Huang amid ongoing scrutiny or moving on from him, which could further destabilize the stock.