Nvidia falls 9% after hours as WSJ says its board is preparing to remove CEO Jensen Huang

Nvidia shares fell about 9% in after-hours trading on Wednesday after the Wall Street Journal reported that the company's board is preparing to remove founder and CEO Jensen Huang. As of 6:21 PM ET, Nasdaq.com showed Nvidia at $158.45, down $15.28 or 8.8% from the $173.73 regular-session close, which itself was up 2.9%. The stock is now below the bottom of its 52-week range of $164.27 to $243.37.

This is a report, not an announcement. CNBC said Nvidia did not immediately respond to its request for comment, and Cointelegraph said the same. Neither the WSJ nor the New York Times articles were open to us, so what follows is what those two outlets say the originals reported.

What was reported

According to Cointelegraph's summary of the WSJ story, which cites people familiar with the matter, directors could meet as soon as Wednesday to decide Huang's future. The WSJ ties the move to two relationships: the one with a woman U.S. intelligence officials believe works for China's Ministry of State Security, and a second one that the New York Times reported earlier in the evening, with an Nvidia executive who reports to him. CNBC says the Times account rests on interviews with people who worked at the company.

Huang has already acknowledged the first relationship. In a message to staff on Sunday he wrote, "I was unfaithful to my wife... There is no excuse for what I did," CNBC reports. The board has opened an independent investigation led by the law firm Wachtell, Lipton, Rosen & Katz, which we covered in our report on the probe. The board has said it has no reason to believe national security or company secrets were compromised, and no finding about Huang or the company has been made public.

We are not repeating the personal details of the second relationship. The business question is narrower: whether a board that opened an investigation days ago would act before it reports, and what a leaderless Nvidia means for customers and lenders.

The number behind the number: how much of Nvidia Huang owns

CNBC reports that most of Huang's Nvidia shares are co-owned with his wife and held in trusts, about 800 million shares, while he holds roughly 70 million directly and has limited economic control. So his removal would not be a sale of his stake. The pressure on the price comes from the other direction: the stock is priced on the expectation that the person who sold the AI buildout to every major customer keeps doing so. Our earlier look at the absence of an obvious successor is the reason a leadership change is treated as a risk event, not a routine one.

How the week stacked up

• Tuesday: Nvidia fell about 5% on a hot inflation reading, as we reported in that day's market close.
• Wednesday: analysts trimmed conviction and a senator called for Huang to go, yet the shares rose 2.9% (our report).
• Wednesday evening: the WSJ report erased that gain and more in extended trading, per Nasdaq.com. After-hours prices come from thin trading and can move sharply by morning.

CNBC notes the stock was already down 7% on the week before the news and on pace for a sixth straight weekly decline, which it links to concern about the durability of AI spending.

Who this hits

Anyone with Nvidia in a retirement account or index fund feels it through weighting, since it is one of the largest companies in the Nasdaq 100. Traders in Nasdaq futures will see it first when the overnight session opens. And the suppliers and customers tied to Nvidia's order book, from memory makers to the AI cloud companies, have more to lose from a disorderly transition than from the headline itself. For how GPUs have become loan collateral, see our report on GPU-backed debt.

What to watch next

• A statement or an 8-K from Nvidia. Leadership changes at a public company must be disclosed on SEC EDGAR, usually within four business days.
• Thursday's open, to see whether the after-hours price holds.
• Third-quarter results on November 17, per Nasdaq.com, and the House briefing requested for November 18.

Sources: CNBC and Cointelegraph, linked above, for the content of the WSJ and New York Times reports; Nasdaq.com quote taken at 6:21 PM ET on November 11 (after-hours, delayed data possible); chart data via Yahoo Finance. The Chronicle could not independently confirm the WSJ report. This is market information, not investment advice.