There is no one at Nvidia who would be ready to replace Jensen Huang

By Britney Nguyen and Emily Bary

Nvidia's CEO has an 'outsize role and unclear succession'

Some analysts see a risk that Nvidia CEO Jensen Huang won't be able to hold on to his role as the board investigates his relationship with a Chinese executive reportedly working as a foreign-intelligence asset.

Nvidia investors may get a crash course in "key-man risk."

That's a Wall Street term to describe the phenomenon at companies led by well-known figures who have become emblematic of the business and seemingly irreplaceable. The fear is that without these central figures, companies risk losing the essence of their success.

Nvidia (NVDA) has said that its board of directors has confidence in CEO Jensen Huang, who will stay in the top position even as the board investigates the implications of his relationship with a woman who reportedly worked as a foreign-intelligence asset for China.

But some analysts see a very real possibility that Huang will have to exit as a result of the investigation and heightened attention. This underscores how the larger-than-life Nvidia CEO has no clear heir apparent.

"The single-man risk affects many companies with a high-profile founder or CEO, such as Apple with Steve Jobs, Meta with Mark Zuckerberg and many others," said Richard Windsor, an independent analyst with Radio Free Mobile.

For Nvidia, though, "this problem is particularly acute because Jensen Huang is very hands-on, meaning that the key decisions that led to its success were ultimately taken by him, and because there is no obvious successor," Windsor said.

See also: As Nvidia's stock falls, here's what Wall Street has to say about the Jensen Huang scandal

D.A. Davidson analyst Gil Luria told MarketWatch that in light of Huang's "outsize role and unclear succession, this is the risk investors are likely to focus on."

Nvidia did not immediately respond to a request for comment from MarketWatch.

Huang has said the "secret" to his more than 30-year tenure as head of Nvidia is "don't get fired" and "don't get bored," according to Bloomberg.

With his signature leather jackets and a tendency to wax on about a "new industrial revolution," Huang has captured the limelight. No other Nvidia executive is well-known to investors, aside from Chief Financial Officer Colette Kress, a 13-year veteran of the company who speaks on the company's earnings call and at conferences.

Yet the jump from CFO to CEO isn't an easy one to make, and many companies prefer to go with leaders who bring operational experience or design vision to the table. Former Intel CFO Bob Swan was derided as a bean counter and lasted just two years in the CEO spot after taking over for Brian Krzanich in 2019.

There's a possibility Kress could be elevated to serve as interim CEO in the event that Huang leaves the post, which would buy the board time to figure out its next steps, Jason Schloetzer, an associate professor of accounting and management strategy at Georgetown University's McDonough School of Business, said to MarketWatch.

In terms of the CEO position, that job "is really just a match for what the firm needs," he said.

If Nvidia needs a leader with deep technical knowledge and a vision for design, it would need "a large bench who can fill in any potential gap that a CFO may have in their knowledge base," Schloetzer said.

In his view, the real risk Nvidia faces is with Huang's leadership structure, which includes 60 direct reports.

"Succession seems to work better when there's more of a pass-the-baton relay, where someone has been telegraphed as being the heir apparent, and that person is visible for a lengthy period of time," he said.

At Nvidia, the work has likely been divided among 60 people, Schloetzer noted, and if Huang's successor is chosen from among them, there's a high likelihood the others will question why it wasn't them.

In that case, Schloetzer said, Nvidia's competitors such as Advanced Micro Devices (AMD), along with major cloud service providers working on custom chips and other chip makers will likely look to recruit from among that pool of executives.

"That is the risk in this situation, is there could be an exodus of talent after the board makes the decision of who they're going to elevate," Schloetzer said.

Should Nvidia's board find an outsider to replace Huang, Schloetzer believes that person will look to restructure top management along the lines of a typical organization.

But Nvidia is in a unique situation, as Huang "is someone who's very difficult to replace," he said. In his view, Nvidia's board has allowed the company to structure itself in a way to "facilitate key-man risk."

Given the size and value Nvidia has reached, "there certainly should be some scrutiny of the board, of why they let this happen," he said.

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-Britney Nguyen -Emily Bary

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11-09-26 1221ET