Jensen Huang built Nvidia into a behemoth. His scandal 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 happens if he's gone?

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 graphic 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 returned 759,500% since Nvidia's IPO 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 leather jackets and boundless energy, Huang became the face of a company that was firmly at the center of the AI revolution.

But now, the scandal around Huang is bringing uncertainty to both the company he built and the technology he nurtured. Huang is reportedly losing the confidence of Nvidia's board after he was reported to have engaged in alleged affairs with a suspected Chinese spy and an Nvidia executive who reports to him. Nvidia's board already this week launched an independent investigation into whether Huang was the target of a foreign-intelligence operation.

The prospect of Huang's ouster as CEO leaves two open questions on Wall Street: What would become of Nvidia without him? And can the artificial-intelligence 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:" 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 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 doesn't have a chairman.

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

It's unlikely any successor could enthrall investors as Huang did before the scandal broke out, 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. The most prominent internal candidates for the top job, Nvidia watchers say, are CFO Colette Kress and Ian Buck, Nvidia's vice president of Hyperscale.

While Huang's overreaching control gave Nvidia's ecosystem great momentum, it also amplified his scandals and poor decisions. Huang's investments in component makers Lumentum amd Coherent, as well as Anthropic, OpenAI and others will all come under question going forward, Sen said.

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

"That's why Lumentum is pushing to do a deal with Marvell, why Anthropic is rushing to IPO," Sen said. She believes these companies are scrambling to lock down funding in a future where the "bank of Nvidia" isn't there to bankroll the AI trade anymore.

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

Still, Nvidia 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 has a wide moat that will take competitors like Advanced Micro Devices or Broadcom time to narrow.

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

"Jensen and Nvidia built the number-one 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 has a limited ability to fight Nvidia's board if it decides to remove him. He owns about 3% of the company, securities filings show, and unlike other Silicon Valley founders of enormous companies, Nvidia doesn't have a dual-class stock structure that grants him control of the company.

"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.

Morningstar analyst Brian Colello told MarketWatch that Nvidia's lack of succession plan for Huang means the company will have to put one together on the fly. Colello pointed to Huang's large role operating the company and his efforts around government relations as challenging to replace.

"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."

Nigam Arora, founder of investment research firm The Arora Report, said Nvidia's shares will likely fall further if the board decides to remove Huang.

"There's no heir apparent," Arora said. Nvidia's role in developing circular financing deals and funding strategic investments has given the company the role of a central bank in the AI ecosystem. Huang's influence and dealmaking skills are exactly what has grown the industry to its current size, Arora told MarketWatch.

"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 of financing deals for the AI ecosystem will likely come under scrutiny, given 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 0230ET