Jensen Huang’s fall can shatter Nvidia’s kingdom

Space Exploration Technologies

Today 12:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Robert Cyran
NEW YORK, Nov 11 (Reuters Breakingviews) - Jensen Huang built a $4 trillion empire and left it with no heir. Nonetheless, the board of chipmaker Nvidia NVDA.O is preparing to oust its CEO, the Wall Street Journal reported on Wednesday. After forging a dizzying web of alliances to keep Big Tech frenemies in line and backstop much of the artificial intelligence industry, his actions weaken the odds of anyone else holding it together.
Huang turned the company he co-founded into one of the most valuable on Earth, pumping out the quintessential silicon for powering chatbots. But extraordinary revelations about extramarital affairs, including with a suspected spy for China, may prove too much for the board.
Investors clearly ascribe immense value to Nvidia’s boss. Based on after-hours stock moves on Wednesday, Nvidia has lost about $1.4 trillion in market value since the New York Times reported on potential links to Chinese intelligence on October 29. That may seem excessive: unlike peers Elon Musk and Mark Zuckerberg, who dominate SpaceX SPCX.O and Meta Platforms META.O respectively, Huang has less than a 4% voting stake. Yet the firm revolved entirely around him, with little solid hierarchy to elevate other leaders. Under him are four executives of equal status, and over 60 direct reports. Even the board has no chairperson. 
Huang employed equally labyrinthine measures to maintain a stranglehold on the industry. Cloud giants like Microsoft MSFT.O, Amazon.com AMZN.O or Alphabet GOOGL.O, as well as labs OpenAI and Anthropic, relentlessly devour Nvidia’s chips. The company’s incredible 75% gross margin attests to how essential these products are. Yet it is also a powerful incentive for those customers to shift toward their own specialized, cheaper creations.
So Nvidia poured money into developing or acquiring both complementary hardware and software, with Huang keenly identifying how to lock users in. He established complicated alliances with private lenders like Apollo Global Management APO.N and Blackstone BX.N to make his chips easier to finance. Then there’s his relationship with President Trump and attempts to keep exports open and smother would-be upstarts globally. Finally, his non-stop pace of dealmaking and guarantees to prop up smaller customers – totting up to exposure of around $300 billion, Bank of America has estimated – helped ensure no one buyer got a negotiating edge.  
Nico Caprez, who spearheads global AI infrastructure growth for the company, might seem well-placed to maintain alliances, but could be too closely associated with Huang as the co-founder’s son-in-law. Finance chief Colette Kress or software maestro Ian Buck at least helped steer key elements of Nvidia’s success. Yet as the board scrambles to contain whatever further fallout might await, any internal pick would start with a weakened hand. Like so many empires, succession under duress is fraught.
Follow Robert Cyran on Bluesky.
         
CONTEXT NEWS 
The board of chipmaker Nvidia is preparing to oust Chief Executive Jensen Huang after revelations of two extramarital affairs, the Wall Street Journal reported on November 11.

(Editing by Jonathan Guilford; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))