Nvidia (NVDA) Shares Drop 12% After CEO Jensen Huang Resigns

Nvidia (NVDA) announced that CEO Jensen Huang will resign following a board meeting after more than 30 years leading the company. CFO Colette Kress was named interim CEO. The resignation came amid reports of two extramarital affairs involving Huang, one with a woman believed by U.S. intelligence to be a Chinese spy. The company's board hired law firm Wachtell Lipton to investigate the situation but stated they have no reason to believe company secrets or national security were compromised.

Following the announcement, Nvidia shares fell more than 12% on Wall Street, nearly wiping out gains of the past month and bringing losses close to 25%. At least six analysts downgraded the stock between Wednesday night and Thursday morning. Melius Research downgraded Nvidia from buy to hold with a reduced price target of $185 from $315, marking just a 6% upside from recent close levels. Evercore lowered its rating from outperform to in line while cutting the price target from $465 to $186, forecasting a 7% upside. William Blair downgraded the stock to market perform.

This development is significant as Nvidia is a major player in AI and semiconductor markets, and leadership uncertainty combined with geopolitical concerns has pressured the stock's valuation. The investigation and lack of a clear succession plan raise concerns about the company’s near-term direction and potential earnings multiples. Investors may face increased volatility until the leadership and investigation outcomes clarify Nvidia’s future outlook.