The chips are down: where does Nvidia go from here?

“The only thing that’s certain for Nvidia’s future is that its earnings call next week will be extremely awkward.”

“Rockstar CEO” Jensen Huang has resigned after revelations that he had two affairs with Nvidia employees and a third with a suspected Chinese spy. The board now “faces the herculean task” of finding a permanent replacement, said Morning Brew.

The philandering phenom “helmed Nvidia for 33 years and led the AI boom in Napoleonic fashion”. As the supplier of 80% of the world’s AI chips, the company’s falling share price “threatens its central-bank-like function in the AI finance ecosystem”.

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What did the commentators say?

Huang may be “an idiot”, “merely reckless” or “a witting accomplice”, but whatever the truth, “Nvidia loses”, said Garrett M. Graff in Wired. Its stock has “plummeted” and “the disaster for Nvidia is just beginning, it seems, as lawsuits loom, including by its own shareholders”.

Huang was “such a towering figure” at Nvidia that his extramarital affairs have landed the chipmaker with “what could be the world’s biggest corporate succession problem”, said Michael Acton in the Financial Times. He used an “unusual horizontal management structure with about 60 executives reporting directly to him” and it’s “set to fragment”.

“The board’s work is only beginning” and the “one option no longer available” to the directors is “blind deference to a single leader”, said Time. Whether Nvidia is “an institution that can not only survive but continue to thrive for the long term beyond any single individual is entirely up to its board”.

There is no obvious successor, which “makes the board’s job unenviable, but not impossible,” said The Economist. “No one has been prepared for the top job” but Colette Kress, Nvidia’s CFO who has been appointed interim CEO, “should be capable of stepping in to stabilise the business” while “a permanent successor, perhaps from outside, is appointed”.

But a number of “major investment firms” have already “downgraded their forecasts for the chip giant”, which is “a rare shift given investors’ long-standing optimism about the company”, said Osmond Chia on the BBC.

“When we lose Jensen, we lose a lot of the animating force that’s been driving the industry,” Jay Goldberg, from investment analysts Seaport Research Partners, told CNN. “So the world just feels a little bit smaller without him.”

In the end, Nvidia had little choice. “Because a person who would be so incredibly foolish in their personal decisions isn’t immune to foolishness elsewhere,” said Jason Aten for Inc. “And if you happen to be leading the world’s largest AI chip company, that’s a bigger problem than a little criticism.”

What next?

Huang has been called to testify next month before a Senate committee about his affair with Alice Huang, a Chinese businesswoman whom US intelligence reportedly suspects has links to Chinese intelligence.

Meanwhile, Nvidia’s board is “left to pick a successor for a company that’s been run by a singular figure with no second-in-command”, said CNBC.

But there could be more revelations. “Our gut tells us we probably haven’t fully probed the depths of what might be found here,” Stacy Rasgon, from Bernstein Research, said in a note to investors.