Nvidia shares slide 8% before the bell as board weighs Jensen Huang's future
Nvidia shares fell sharply before the opening bell on Thursday after the chipmaker's board met to consider whether to remove co-founder Jensen Huang as chief executive. No decision had been announced as of early Thursday.
What the board is weighing
CNBC confirmed the board met on Wednesday to discuss whether to oust Huang, after The Wall Street Journal reported Nvidia was preparing to force him out. The meeting followed a New York Times report that Huang had a relationship with Kimberly Powell, Nvidia's vice president of health care, who reports to him.
Days earlier, Huang admitted to an affair with Alice Huang, a Megaspeed executive whom U.S. intelligence officials believe is a spy for China, according to the Financial Times and CNBC. In a memo to staff on Sunday he wrote: "I was unfaithful to my wife." The board has hired law firm Wachtell, Lipton, Rosen & Katz to investigate.
The market reaction
Shares of rivals moved the other way before the open, CNBC said.
| Stock | Premarket move |
|---|---|
| Nvidia | -8.1% |
| AMD | +3.9% |
| Broadcom | +3.0% |
Source: CNBC premarket figures; the Nvidia move was as of 7:05 a.m. ET.
The selling spread overseas. Asian markets fell overnight, and Chinese tech firms that use Nvidia chips dropped in Hong Kong, with Alibaba down 6.7% and Tencent 2.6%, Reuters reported. Wall Street futures were 0.5% weaker.
'Jensen is Nvidia'
Analysts told CNBC the stock could fall 20% if Huang were removed. Bernstein's Stacy Rasgon said the reported relationship with a direct report makes it "much tougher for the board to leave him in position."
Jensen is Nvidia, right? He is the visionary. The reason they're in the position that they're in today is because he made decisions 10 years ago.
A hard call with no successor
Nvidia's bylaws let a majority of its 11 directors dismiss the CEO with or without cause, The Next Web reported. But Huang, 63, owns about 3.6% of the roughly $4 trillion company and has not put a succession plan in place. Bloomberg reported the board is working with an outside firm to identify possible replacements.
Nvidia's stock is already down more than 20% over the past month, CNBC said. Nvidia and Powell did not respond to requests for comment from CNBC.