Nvidia shares fell approximately 8% in after-hours trading following reports that the company’s board is preparing to remove Chief Executive Jensen Huang following revelations of two extramarital affairs.
The stock closed Wednesday’s regular session at $173.73, up 2.92%, before falling to around $160.69 in extended trading. If the decline continues, the company could see approximately $600 billion wiped off its market capitalization.
Wednesday’s extended-hours decline reversed gains recorded earlier in the session, when Nvidia participated in a broader recovery among artificial intelligence infrastructure stocks. Prediction market platform Polymarket also saw a shift in expectations, with the probability of Huang resigning or being removed by the end of the year rising to 88%.
Reports that United States intelligence agencies were examining whether Alice Huang helped facilitate shipments of Nvidia chips to Chinese companies have also prompted questions about the company’s exposure to national security concerns. Shareholders have launched a class action lawsuit against the company for misleading quotations from Jensen Huang that deceived investors.
Kimberly Powell, Nvidia’s vice president of healthcare, was allegedly caught on camera being affectionate with Jensen Huang at a Nvidia conference back in March. Security personnel reportedly approached the recording bystander and offered a nondisclosure agreement to try and cover up the fling, though The New York Times has not seen this footage.
In his statement, Huang apologized to his family and colleagues and pledged to cooperate with the board’s investigation. The NVIDIA Board of Directors initiated an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort, appointing external legal advisers.
Jensen fully supports the review and has committed to cooperating with it, and the board has confidence in Jensen and his leadership team.
The company’s bylaws allow the board to remove the chief executive with or without cause through a majority vote. Of Nvidia’s 11 directors, all except Huang are considered independent. The latest development represents a change in the board’s position, as Nvidia’s directors had publicly backed Huang and his leadership team on Sunday.
Directors could meet as soon as November 11 to decide Huang’s future, according to reports citing people familiar with the matter. However, an unresolved CEO succession question introduces an additional source of valuation uncertainty that strong operating results alone may not eliminate.
The allegations have already prompted congressional scrutiny of Huang’s reported intelligence connections, with Republican lawmakers seeking a closed-door briefing on November 18.
Earlier coverage: Nvidia Board Considers Removing CEO Jensen Huang, WSJ Reports