Nvidia's stock fell more than 8% in extended trading Wednesday following reports that the chipmaker's board of directors is preparing to fire CEO and co-founder Jensen Huang amid a widening extramarital affair scandal [1]. The Wall Street Journal reported that Nvidia's board was preparing to oust Huang, with plans to meet as soon as Wednesday to discuss his future, while The New York Times reported that Huang had an affair with Kimberly Powell, the chip giant's vice president of healthcare [1]. These reports followed earlier Times reporting that Nvidia's board was investigating an affair Huang admitted to having with an executive at Singapore-based cloud computing company Megaspeed — a woman U.S. intelligence agencies believe is a Chinese spy [1]. On Tuesday, Nvidia's board hired the law firm Wachtell, Lipton, Rosen & Katz to lead the inquiry [1].
Jim Cramer expressed significant concern about Huang's potential departure, stating on "Mad Money" that "a Jensen-less Nvidia is an Nvidia many will not want to own" [1]. Cramer noted the unexpected nature of the situation, saying "I didn't think [anything like] this would happen. I don't know anyone who did. It's very sobering" [1]. The Investment Club, which has owned Nvidia since 2019, downgraded its rating on the stock to a hold-equivalent 2 on Tuesday due to uncertainty around Huang's future [1]. In response to the scandal, the Club expressed intentions to initiate a position in rival Advanced Micro Devices, believing AMD will win business as a result of the Huang scandal, and plans to exit Intel while building up an AMD position [1]. Cramer stated he vastly prefers AMD over Nvidia in the current moment [1].
Regarding Nvidia's near-term outlook, Cramer indicated he does not want to buy additional shares into the scandal-driven sell-off, nor does he want to sell ahead of next Tuesday's earnings report [1]. However, he expressed belief that the company can still succeed over the long term even without Huang at the helm, citing his experience watching Apple thrive after the death of co-founder Steve Jobs [1].
CONCLUSION
Nvidia faces severe near-term uncertainty as its board prepares to potentially oust CEO Jensen Huang over extramarital affairs, triggering an 8% stock decline and prompting major investors to downgrade ratings and shift capital toward competitor AMD [1]. While analysts believe the company could recover long-term under new leadership, the immediate market sentiment is decidedly negative, with key stakeholders actively repositioning away from Nvidia during this period of governance crisis [1].