Nvidia investors were on tenterhooks Thursday morning amid reports that the chip giant's board had convened to discuss CEO Jensen Huang 's future with the company.
The New York Times on Wednesday reported that Huang had engaged in a second extramarital affair with an employee. The CEO was already under scrutiny after Huang admitted to having a romantic relationship with a woman U.S. intelligence believes is a Chinese spy.
Nvidia is yet to make a public statement about Huang's future with the company. However, CNBC confirmed late on Wednesday that the board was meeting to decide whether or not to oust him after more than 30 years at Nvidia's helm.
The company's stock is down 7% so far this week, after tumbling 4.3% on Monday and 5.5% on Tuesday as Huang dominated headlines around the world. Shares rebounded 2.9% on Wednesday, but were last seen roughly 5.4% lower in premarket trading on Thursday.
Here's what analysts are saying about the company and its shares.
"In our view the writing is on the wall that Jensen's days at Nvidia could be numbered and we would expect this to be a very fluid situation over the next 48 hours," renowned tech bull Ives said in a note overnight.
"Jensen has created a black eye moment for himself and Nvidia and now has created a spider web of complexity that Wall Street, Silicon Valley, DC, and the global tech ecosystem are trying to figure out what is next."
"We believe Nvidia's value is $300 per share with Jensen as CEO and $225 per share without Jensen as CEO," Ives added.
"The stock will clearly be under pressure with this fluid news but the reality is its a dark day for Nvidia, but the company will navigate this turmoil and get through to the other side and remain a core foundational piece of the AI Revolution."
Citi analysts said overnight that they had trimmed their target price for Nvidia to $225, down from $285.
"If Jensen were forced out, it would mark the end of an era," Malik and Sylla said in their note.
"Under his leadership, Nvidia became the dominant force in AI infrastructure, the primary beneficiary of the global AI spending cycle, and one of the world's most valuable companies. A leadership transition creates an overhang on the stock given his central role in strategy, product vision, customer relationships, and investor confidence."
They said Nvidia Chief Financial Officer Colette Kress could serve as interim CEO while the board evaluates external candidates.
"NVIDIA upheaval puts tech concentration risks in focus," Haefele and his team said on Thursday morning.
"Without taking any views on individual companies, the episode reinforces the importance of investment diversification and selectivity as the AI trade matures. We retain our conviction in AI's long-term potential, with compute demand remaining robust and earnings resilient. But elevated expectations and potentially wide differences in company outcomes can leave concentrated portfolios exposed to company-specific setbacks."
"Jensen Huang is toast," Blain said in his morning newsletter. "Nvidia's dependence on Jensen Huang is now exposed as a major market risk. The dominant firm within the AI industry lacks clear succession planning and Huang was seen as the acceptable face of AI by the public."
"Confidence in the AI sector has been wobbling for months," he added. "Huang's departure could lead to instability and trigger another collapse."
