Investors fear that a possible departure of Nvidia CEO Jensen Huang could weaken the chipmaker's commitment to financing the artificial intelligence (AI) boom, raising fresh concerns about the sustainability of one of the world's most crowded market trades, Reuters reported.
Nvidia's board met on Wednesday to decide Huang's future following reports of two extramarital affairs involving the company's longtime chief executive. The developments triggered a sell-off in Nvidia shares and those of some of its key customers, while shares of chipmaking rivals Broadcom and AMD gained.
The uncertainty also boosted Chinese semiconductor stocks on Thursday, with leading graphics processing unit (GPU) makers Moore Threads, MetaX and Cambricon rising nearly 10% on expectations that domestic suppliers could gain market share, Reuters reported.
However, investors are increasingly concerned about the broader implications for the AI industry if Nvidia changes its strategy of investing billions of dollars in data-centre infrastructure and supporting its customers.
According to Reuters, market participants fear that a leadership change could affect not only Nvidia but also the wider ecosystem of companies that depend on its financial backing to expand AI computing capacity.
The concerns triggered a broader risk-off reaction, with Nasdaq 100 futures falling nearly 1% in Asian trading after Nvidia shares dropped 8% in after-hours trading.
Nvidia has been one of the biggest beneficiaries of the AI revolution, with its advanced chip technology and soaring sales helping its stock gain around 900% over the four years since OpenAI launched ChatGPT.
Beyond supplying GPUs, the company has increasingly emerged as a financier of the AI industry, investing billions of dollars in customers through equity stakes, infrastructure partnerships and other financial commitments.
A potential departure of Huang could therefore create uncertainty around the company's long-term investment strategy and its ability to sustain the pace of AI infrastructure spending.
Reuters reported that Nvidia's board had launched an investigation into Huang following allegations involving an affair with a businesswoman who was reportedly suspected of being a Chinese spy. A subsequent report about another alleged affair emerged ahead of Wednesday's board meeting.
While analysts do not expect an immediate collapse in Nvidia's revenue if Huang leaves, concerns centre on the company's long-term strategic direction. Huang has played a central role in anticipating computing trends and positioning Nvidia at the heart of the global AI build-out.
Huang co-founded Nvidia more than three decades ago and transformed it into a roughly $4 trillion company, making it the world's leading supplier of AI chips and a major player in the US-China technology rivalry.
The company has never publicly identified a successor to Huang. However, analysts have pointed to senior engineer Ian Buck and Chief Financial Officer Colette Kress as potential internal candidates, although neither has the same public profile or influence as the current CEO, Reuters reported.
Nvidia's Financial Commitments Add to Concerns
Nvidia's extensive financial exposure to the AI ecosystem is another source of investor anxiety. The company disclosed approximately $164.5 billion in financial commitments in its latest earnings report, according to Reuters.
These include an obligation capped at $105 billion linked to an OpenAI data-centre project in Ohio, alongside more than $50 billion in lease and other capacity guarantees.
Nvidia is also among the investors in Anthropic , the creator of the Claude chatbot, whose planned initial public offering this month is expected to test investor appetite for AI-related businesses.
The uncertainty surrounding Huang's future weighed on some of Nvidia's key partners. Shares of data-centre operator CoreWeave, which had rallied on Wednesday following upbeat earnings, fell more than 6% in after-hours trading. South Korea's Naver, which received a $1 billion investment from Nvidia to support data-centre expansion, also declined nearly 6%.
However, some investors believe a leadership transition would not immediately undermine Nvidia's competitive position, given the strength of its GPU technology and continued demand for AI computing capacity.
The immediate focus is likely to shift to Nvidia's earnings next week, when investors will assess the company's leadership outlook, investment strategy and whether its growth projections remain sustainable under a potential successor.
As Reuters reported, the key question for markets is whether Nvidia can maintain the strategic vision and financial backing that have helped drive the global AI investment boom, even without Huang at the helm.