TLDR
- Nvidia (NVDA) stock fell about 10% in premarket trading after CEO Jensen Huang resigned.
- CFO Colette Kress is interim CEO, and the board is searching for a permanent pick.
- Harvey C. Jones, ex-Synopsys CEO, is the board’s first chairman.
- Citi, Bernstein and KeyBanc turned more cautious on the stock.
- Nvidia still plans to report earnings on Nov. 17.
Nvidia (NVDA) stock dropped about 10% in premarket trading Thursday after CEO Jensen Huang resigned, effective immediately. Early prices sat near $158.58, and premarket quotes dipped to $153.50, versus Wednesday’s close of $173.73.
CFO Colette Kress takes over as interim CEO and keeps her CFO duties. The board has opened a search that covers both internal and external candidates.
Harvey C. Jones, the former Synopsys CEO, is now the first chairman in Nvidia’s board history. He will oversee the hunt for a permanent chief executive.
Nvidia gave no reason for the resignation. Huang has not commented.
The company thanked Huang for his contributions to Nvidia and the industry. He co-founded the chipmaker in 1993.
How the Week Unraveled
Pressure built over several days. Barron’s noted the stock was already down 7% for the week through Wednesday’s close.
Reports of two alleged relationships drew scrutiny. One involves a businesswoman reportedly suspected by US intelligence of helping route restricted chips to Chinese firms. The other, per The New York Times, involves Kimberly Powell, who runs Nvidia’s healthcare business.
Nvidia’s board announced an independent investigation on Nov. 8. It said it had no reason to believe national security or company secrets were compromised, and Huang pledged to cooperate.
The Wall Street Journal then reported that the board was weighing his removal. Directors met to discuss his future.
Washington added pressure. Sen. Kevin Cramer said Huang should step down, and Rep. John Moolenaar said Huang could face subpoenas if he skipped a request to appear before three House committees.
Wall Street Reacts
Citi’s Atif Malik cut his price target to $225 from $285. He said Kress could serve as interim CEO while the board looks outside.
Bernstein’s Stacy Rasgon downgraded the stock to Market Perform from Outperform and lowered his target to $200 from $400. He said he does not expect big operating problems during the search.
KeyBanc’s John Vinh had already moved to Sector Weight from Overweight. He pointed to higher strategic and execution risk.
Based on Wednesday’s after-hours prices, Nvidia trades at under 11 times forward earnings. The five-year average is 33.7 times.
On Polymarket, bettors favored Arm CEO Rene Haas as the top outside candidate. Haas once worked at Nvidia as a vice president.
Futures on the Nasdaq 100 and S&P 500 were down 1.3% and 0.7%. The iShares Semiconductor ETF was down 2.9%.
Nvidia confirmed it will report third-quarter results on Tuesday, Nov. 17, as scheduled.
