Nvidia's stock drops as the board reportedly prepares to remove CEO Jensen Huang

By Britney Nguyen, William Gavin, Christine Ji and Hannah Pedone

Nvidia's board of directors reportedly could meet as soon as tonight to determine the CEO's fate

CEO Jensen Huang is under increasing pressure.

Shares of Nvidia were falling more than 8% in Wednesday's extended trading session following reports that CEO Jensen Huang had an affair with an employee and that the company's board was prepared to oust him from his role.

The news stands to shake up the artificial-intelligence industry, in which Huang and Nvidia (NVDA) are central figures.

Nvidia's stock had lost 7% through Wednesday's close since the company disclosed over the weekend that its board was launching an investigation into whether Huang had compromised corporate secrets. At the time, Nvidia said it was keeping Huang in his role.

Now, investors are reacting to a New York Times report saying that Huang engaged in a relationship with Kimberly Powell, an executive at Nvidia who reported to him. The piece cited unnamed people who worked at the chip maker. Powell is listed as Nvidia's vice president of healthcare on the company's website.

Nvidia and Powell didn't immediately respond to a MarketWatch request for comment.

"This is starting to look like the worst case scenario for Nvidia investors," Morningstar analyst Brian Colello told MarketWatch.

The New York Times report adds to concerns that emerged over the weekend, when Huang admitted to having an extramarital affair. Reports indicated that the relationship was with someone the U.S. government believes could have been a Chinese foreign-intelligence asset.

Separately, the Wall Street Journal reported Wednesday that Nvidia's board was prepared to remove Huang from his post. The board was set to meet as soon as today, according to the story.

"I don't think the board has any choice but to act if there is evidence of a second affair," StoneX analyst Cody Acree told MarketWatch. "Every company has an ethics mandate, and Nvidia is no exception to that."

The board has latitude to replace Huang - something that wouldn't be so easy at other founder-led companies.

"Nvidia has one class of stock," Michael Monaghan, portfolio manager at Founders 100 ETF, told MarketWatch. Huang "doesn't hold the super-voting control some newer founders have, so this is the board's call."

Users on the online betting platform Polymarket largely expect Nvidia to announce Huang's resignation by the end of the month, if not sooner. Bettors say there's a 30% chance Huang's resignation is announced as soon as tomorrow, while assigning a 68% probability that he's out of the company by the end of the month, according to one market. (Polymarket has a data partnership with MarketWatch's publisher, Dow Jones.)

Acree noted that this would be no ordinary executive departure as Huang is synonymous with Nvidia, which he co-founded in 1993. There are also broader implications for the world of artificial intelligence, given Nvidia's central role in powering AI models with its signature chips.

"Without Nvidia, there is no AI industry," Acree said.

The market implications could be profound. "Nvidia's stock is very much at risk of another major leg down here," he noted.

Bernstein analyst Stacy Rasgon just downgraded Nvidia's stock from outperform to market-perform, noting that he was "struggling mightily" to do so. While he can see the appeal of buying Nvidia's shares at depressed levels, Rasgon said he expects more could come from the investigations into Huang. Therefore, he would "prefer to watch from the sidelines."

Another issue is that a CEO change "may change the company's leadership chart, but it won't close the underlying inquiries" into Nvidia, wrote Terry Haines, founder of forecasting firm Pangaea Policy, in note Wednesday evening.

"So investors looking for a quick end to this almost certainly will be disappointed," he said. "Nvidia's independent board investigation and reported law-enforcement scrutiny of possible chip-diversion issues will continue whether Huang leaves Nvidia or moves into a purely product-focused role."

Raymond James analyst Simon Leopold wrote that "if the stories are accurate, the incidents highlight serious lapses in judgment that Nvidia will need to address."

"Given the potential legal or compliance violations, we encourage greater transparency," he added.

Shares of Nvidia rivals Advanced Micro Devices (AMD) and Broadcom (AVGO) were up more 4% and 3%, respectively, in after-hours action Wednesday following the reports.

The matter could "provide an opportunity to Nvidia's competitors such as Advanced Micro Devices if clients worry about instability around Nvidia," Jack Gold, president of J.Gold Associates, told MarketWatch.

Robert Schroeder contributed reporting.

-Britney Nguyen -William Gavin -Christine Ji -Hannah Pedone

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11-11-26 2035ET