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Nvidia board weighs Jensen Huang's future after affair scandal

Nvidia brought in lawyers and a CEO search agency as its board weighs Jensen Huang's future. Shares fell to a seven-month low, and stock futures slipped as the uncertainty spread.

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Nvidia's board gathered on Wednesday to weigh removing Jensen Huang as chief executive. The meeting came after Huang acknowledged an affair with a woman alleged to be a Chinese spy. Nvidia shares hit a seven-month low as the uncertainty spread.

On Sunday the board had expressed confidence in Huang and his leadership team, so the shift has been fast. Huang holds a 3.6% stake in the company and lacks the extra voting power that is common for founders at other firms.

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Elon Musk backed Huang by replying 'I agree' to a post by Shaun Maguire, a partner at Sequoia. Maguire wrote that Huang 'did something incredibly dumb' and was 'bad for America', but added: 'Jensen is irreplaceable for America’s AI leadership.'

NVIDIA$162.43down −26.60%over 1 month
$221.97$162.4314 Oct13 Nov

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The board's position became more uncertain late on Wednesday. A separate extramarital affair involving Huang and Kimberly Powell, Nvidia's president of healthcare, has also come to light.

The company brought in outside lawyers to examine the matter, and its board has started an independent investigation. Nvidia has also appointed a CEO search agency to look for a possible replacement for Huang.

US President Donald Trump said he had spoken with Huang on Monday, and that the FBI is looking into the matter. His comments came as the scandal spread across Silicon Valley.

US stock futures fell as the leadership uncertainty weighed on sentiment, and European tech shares also declined. Futures are contracts that track where a market is expected to open, so the drop signaled nerves before trading began.

Analysts pointed to key-person risk, the danger that a company depends too heavily on one leader. Investors tend to struggle to price in such issues, and Nvidia matters to tech, markets and the wider economy.

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Background

Nvidia's graphics processing units, or GPUs, became a core tool for building AI, and tech giants competed hard for them.

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