Jensen Huang was a 'China salesman' for Nvidia. His exit is weighing on Chinese tech stocks.

By Hannah Pedone and Britney Nguyen

The former Nvidia CEO was an 'influential voice' for selling chips to Chinese companies, but now investors are preparing for more restrictions, experts say

Jensen Huang resigned as Nvidia CEO on Thursday.

Former Nvidia CEO Jensen Huang had faced scrutiny for pushing to sell his company's artificial-intelligence chips to China long before his abrupt departure earlier this week. Now that he's gone, worries that Nvidia's chips will come under stricter controls is weighing on Chinese tech stocks.

Hong Kong-listed shares of Alibaba Group Holding (HK:9988) and Tencent Holdings (HK:700) fell more than 3% on Friday after Huang, who had led Nvidia (NVDA) for the 33 years since he co-founded it, resigned Thursday. Nvidia Chief Financial Officer Colette Kress will serve as interim CEO while the chipmaker's board seeks a permanent replacement.

Huang's exit "removed the most influential voice against U.S. chip-export controls," Brendan Burke, research director of semiconductors, supply chain and emerging tech at the Futurum Group, told MarketWatch.

Therefore, Hong Kong and Shanghai-based investors "are pricing in a faster, tougher crackdown as a result," he said.

Shares of Hong Kong-listed AI company Zhipu (HK:2513), which trades as Z.AI, fell 10% on Friday, while MiniMax Group (HK:100) fell 8.2%.

Burke noted that shares of Chinese AI labs have borne the brunt of those concerns, given those companies train models on Nvidia's hardware by renting computing power from data centers based in Southeast Asia.

With the region under renewed focus following Huang's admittance to having an affair with a former executive of Singapore-based cloud provider Megaspeed, the U.S. government will likely move "to close that route," Burke said. U.S. intelligence reportedly suspects the former executive, Alice Huang, was a Chinese intelligence asset used to target the former Nvidia leader. The two are not related.

Although Chinese companies are restricted by the U.S., and to an extent by the Chinese government, from importing Nvidia's more advanced chips, the companies can still legally rent the computing power through data centers in the region that are not subject to U.S. export controls.

On the other hand, domestic chip designers, including Shanghai-listed Cambricon Technologies (CN:688256), were up Friday "because they become the default substitute" if access to Nvidia's chips is more limited, Burke said.

"The market is betting that Jensen's exit forces China to go it alone sooner, which helps the companies selling substitutes and hurts the ones that need top-tier compute today," Burke said.

Zephirin Group analyst Lenny Zephirin shared a similar view, telling MarketWatch that weakness in Chinese tech stocks on Friday reflected heightened concerns over China's access to U.S. chip technology.

Huang was essentially a "China salesman" for Nvidia, he said, noting that the embattled former CEO was an advocate for Chinese companies to retain access to U.S. chips. His resignation marks the loss of an influential corporate voice "from the debate over what access China should have to advanced U.S. chips," Zephirin said.

He added that an " underlying shift in decision-making authority" is a big concern for investors. To Zephirin, the current move of influence from corporate leadership toward Washington "represents a structural shift in the regulatory landscape rather than simply another round of headline-driven volatility."

This week a new consensus emerged that Nvidia could soon face tougher export rules that would make it harder for the company to sell its chips to China and Southeast Asia. There are currently three bills that are now more likely to pass Congress as soon as next month through an annual defense package, analysts said.

Brendan Ahern, chief investment officer at KraneShares, added that Alibaba and Tencent are currently in a quiet period ahead of earnings next week. That means the companies can't participate in buybacks or respond to Nvidia's situation, he told MarketWatch.

Don't miss: Who can replace Jensen Huang as Nvidia CEO? These four names are buzzing in AI circles.

-Hannah Pedone -Britney Nguyen

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11-13-26 1519ET