Nvidia CEO's shock exit fuels fears of an AI bubble burst

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Nvidia CEO Jensen Huang is stepping down, marking a major setback for the artificial intelligence industry and raising uncertainty over the future of the chipmaker he transformed into a global AI powerhouse.

The company announced on Thursday that Chief Financial Officer Colette Kress would serve as interim CEO while it searches for a permanent successor. Former Synopsys CEO and Nvidia board member Harvey Jones has been appointed as the company's first chairman.

Huang, who co-founded Nvidia and holds approximately 3.61 per cent of its shares, will also leave the company's board.

Following the announcement, Nvidia shares dropped more than 10 per cent in premarket trading, putting pressure on the broader stock market.

His departure comes amid growing scrutiny over allegations involving his personal relationships. Reports claimed that the 63-year-old had an affair with a Chinese businesswoman suspected by US authorities of having links to Chinese intelligence. The allegations also included a reported relationship with a senior Nvidia executive who directly reported to him.

According to a person familiar with the matter, Nvidia's board met on Wednesday to consider removing Huang from his position.

The leadership change has created uncertainty for the $4 trillion company and the wider AI ecosystem, which has benefited from Nvidia's investments in cloud service providers, suppliers and major AI research companies.

Investment analysts warned that the biggest challenge for Nvidia could be maintaining its operational coordination and execution without Huang, who played a central role in managing the company's complex business network.

The development also comes at a difficult time for AI-related stocks, as rising borrowing and enormous spending by major technology companies have raised questions about the long-term financial returns of the AI boom.

Huang's departure could also affect US semiconductor export policies, particularly given his efforts to maintain access to the Chinese market and his close relationship with US President Donald Trump.

Trump said on Sunday that Huang had done an excellent job for the United States. He also claimed that the Nvidia chief had told him he was unaware that the Chinese woman involved in the reported affair was allegedly a spy.

Huang's rock-star status

Nvidia was once primarily known for producing high-performance graphics chips for gamers. However, its processors' ability to perform multiple calculations simultaneously made them essential to the development of artificial intelligence.

The company's growing importance in the US-China technology competition helped turn it into the world's most valuable company and made Huang one of the industry's most influential executives.

His popularity extended beyond the technology sector, particularly in Taiwan and South Korea, where fans frequently approached him for autographs on books, posters and even their bodies.

However, scrutiny intensified following reports about his alleged relationship with Alice Huang, a former executive at Singapore-based cloud computing company Megaspeed. US authorities reportedly concluded that she was an asset of Chinese intelligence, although Beijing has denied the allegation. The two individuals are not related.

Megaspeed has also faced scrutiny from Washington over suspicions that it helped China obtain advanced AI chips restricted under US export controls. The company was reportedly an official Nvidia cloud partner with priority access to its processors.

Earlier this month, Nvidia's board launched an investigation, led by independent directors and external legal advisers, into whether Huang had been targeted by a foreign intelligence operation. At the time, the board expressed confidence in his leadership.

The controversy intensified further on Wednesday after The New York Times reported that Huang had also allegedly been involved in a relationship with Kimberly Powell, Nvidia's vice president of healthcare, who reported directly to him.