Jensen Huang built Nvidia into a behemoth. His resignation puts the entire AI boom in jeopardy.

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

Huang fueled his company and the AI ecosystem with advanced chips and creative financing deals across the supply chain. What will happen now that's he gone?

Nvidia announced the resignation of CEO Jensen Huang on Thursday.

In April 1993, Jensen Huang met with two electrical engineers at a Denny's diner in northern California and came up with a plan to start a new company from scratch. In the years that followed, Nvidia evolved from a company that focused on video-game graphics cards to one that designed graphics processing units, or GPUs, that powered the artificial-intelligence boom.

With Huang at the helm as CEO, Nvidia (NVDA) became a stock-market darling. The company's shares have returned 759,500% since Nvidia's initial public offering in 1999, giving the company a market capitalization of $4.19 trillion at the close of trading on Wednesday, according to Dow Jones Market Data. With his trademark leather jackets and boundless energy, Huang became the face of a company that was firmly at the center of the AI revolution.

Now the scandal around Huang is bringing uncertainty to both the company he built and the technology he nurtured. Huang resigned from the CEO position on Thursday after losing the confidence of Nvidia's board. He was reported to have engaged in affairs with a suspected Chinese spy and with an Nvidia executive who reports to him.

With Huang now out as CEO, there are two major questions confronting Wall Street: What will become of Nvidia without him? And can the AI trade survive without the man whose deals helped bolster companies across the technology supply chain?

It's hard to overstate just how critical the 63-year-old has been to both Nvidia and the advancement of artificial intelligence in the United States.

"AI is where it is because of him, no matter anything else about his character," Anni Sen, managing partner at BluBird Capital, told MarketWatch. "Nobody else has that vision."

Huang not only could see where the technology was going, he was extremely bold in steering Nvidia to the forefront of the tech industry. His pivot years ago toward general-purpose computing was costly and initially hated by Wall Street, but Huang saw what he called a "zero-billion-dollar-market" - in other words, a nonexistent industry waiting to be developed.

"Founders bring vision, execution and grit. Jensen is the archetype. He is the architect of the modern AI economy," said Michael Monaghan, portfolio manager at Founders 100 ETF.

But that prestige is now giving way to the downsides of having a corporate founder like Huang at the helm of a company for too long. Huang was active across the organization, with an estimated 60 direct reports and a reported disinterest in succession planning. Nvidia's board has no chairman.

As the AI boom unfolded, Huang greased the wheels of Nvidia's sales funnel through aggressive and shrewd business deals. Nvidia has invested in customers and suppliers not only to sell more chips but also to speed up the development of AI. The company has pioneered ways to securitize loans with Nvidia chips.

Nvidia's board has appointed Chief Financial Officer Colette Kress as the company's interim CEO. However, it's unlikely any successor could enthrall investors as Huang did, market analysts say. No other Nvidia executive is well-known to investors or likely be able to as aggressively push the AI boom with creative Nvidia-backed financing arrangements.

While Huang's overarching control gave Nvidia's ecosystem great momentum, it also amplified his scandals and poor decisions. Huang's investments in component makers Lumentum (LITE) and Coherent (COHR), as well as AI companies Anthropic, OpenAI and others, will all come under scrutiny going forward, Sen said.

Chip sales will likely take a hit as a new leader inevitably does things differently. And Sen expects that without the capital infusions from Nvidia, the AI trade will go forward with a much lower valuation multiple.

"That's why Lumentum is pushing to do a deal with Marvell (MRVL), why Anthropic is rushing to IPO," Sen said. She believes these companies are scrambling to lock down funding for a future where the "bank of Nvidia" is no longer there to bankroll the AI trade.

'If we take our most visionary semiconductor leader away, how is that good for the United States?'

Nvidia still has a lot going for it, and plenty of good will has been cultivated over the last few decades. While Huang may be a visionary, the company also has a wide moat that competitors like Advanced Micro Devices (AMD) or Broadcom (AVGO) will need time to narrow.

Nvidia's business remains intact, and its massive revenues are expected to continue growing, Bernstein analyst Stacy Rasgon said in a client note, calling the stock "almost absurdly cheap." Despite "struggling mightily," Rasgon downgraded the stock from outperform to market-perform, citing potential investigations into Huang and Nvidia.

"Jensen and Nvidia built the No. 1 AI chip company in the world that has not only the best chips but really an ecosystem that developers and other companies use to advance AI," Whitney Stewart, portfolio manager at Sterling Capital Management, told MarketWatch.

"The fundamentals of the company and the legacy of the success of the products and the business is probably unaffected," he added.

Huang had a limited ability to fight Nvidia's board once it started moving to remove him. He owns about 3% of the company, securities filings show, and unlike other giant Silicon Valley companies, Nvidia doesn't have a dual-class stock structure that grants its founder control.

"Nvidia has one class of stock. Jensen doesn't hold the super-voting control some newer founders have, so this is the board's call," said Monaghan of the Founders 100 ETF.

Nvidia's lack of a succession plan for Huang means the company will have to put one together on the fly, Morningstar analyst Brian Colello told MarketWatch. Colello pointed to Huang's large role in operating the company and his efforts around dealing with the government as challenging for someone else to fill.

In addition to naming Kress as interim chief executive, it also named its first board chair, veteran venture-capital executive Harvey Jones. Nvidia said the board will look both internally and externally for a new CEO.

"There are dozens of VPs that report to Jensen directly. Do any of these VPs have much of an idea of what the others are doing? So when we think about long-term roadmap and long-term products, are any of the VPs or future successors able to handle so many different lines of businesses and such different technologically complex products?" asked Colello. "The U.S. government is going to need to get used to working with somebody else at Nvidia very closely."

Huang's influence and dealmaking skills are exactly what has grown the industry to its current size, said Nigam Arora, founder of investment research firm the Arora Report.

"What gives the U.S. an edge over China? The chips," Arora said. "If we take our most visionary semiconductor leader away, how is that good for the United States?"

Ted Mortonson, a managing director at Baird, told MarketWatch that Nvidia's billions of dollars in financing deals for the AI ecosystem will likely come under scrutiny, given that those investments will be considered contingent liabilities.

"He will go down as one of the greatest tech visionaries and CEOs ever, but that's 100% tainted by moral behavior," Mortonson said.

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

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11-12-26 0949ET