Nvidia investors rush to keep Jensen Huang despite private disappointment
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Nvidia investors are rushing to CEO Jensen Huang's defense publicly, while privately expressing disappointment following the executive's admission of an affair with a purported Chinese spy.
Why it matters: Investors appear to be campaigning to prevent Huang from getting ousted from the CEO spot. Nvidia shares are down more than 5% in pre-market trading, but other tech stocks appear to be holding up, meaning the episode doesn't appear poised to trigger a large-scale selloff.
What they're saying: A tech investor with Nvidia holdings called the situation "profoundly disappointing" but added that they think Huang will stay in the CEO seat, as the company is too essential to fail given its role at the center of the AI ecosystem.
- Nvidia's board launched an independent probe, which investors worry could result in pressure for Huang to leave his post.
- "Nvidia and its AI success and ambitions are heavily tied to him staying on as CEO," Dan Ives, senior managing director at Yorkville Ives, wrote in a note to clients.
Catch up quick: Huang had an affair with a woman U.S. officials believe was recruited to seek information and potentially push for Nvidia's advanced chips to be made available in China, the New York Times reported.
- Huang has pushed to loosen restrictions on selling advanced chips to China as the two countries race for AI dominance.
Zoom in: Major investors rushed to publicly support Huang.
- Huang "is an incredible human. ... We should all support him and his family. Onward," Pershing Square CEO Bill Ackman wrote on X.
- Gavin Baker, managing partner and CIO of Atreides Management, said on X: "I simply do not believe he would ever knowingly do anything to disadvantage either America or Nvidia."
Zoom out: The timing is not ideal for investors.
- Huang's admission comes after tech stocks were in a post-election rout, resulting in $2.5 trillion being taken out of the tech-heavy Nasdaq.
- Also: Congress, having turned blue, is looking to investigate tech execs who work closely with the Trump administration.
- An investor told Axios they were concerned about the amount of time Huang would have to spend in Washington as investigations unfold.
Threat level: A new CEO could hurt not just Nvidia, but the broader market.
- This could result in a "wholesale bursting" of the AI bubble, Joe Brusuelas, principal and chief economist at RSM, told Axios.
- It's "disturbing," portfolio manager Adam Johnson at Bullseye told Axios, adding that it concerns him because "generally speaking, boards dismiss CEOs" after affairs: "I hope they don't."
The bottom line: Nvidia's key man risk is strong, and investors who may be skeptical behind closed doors are rushing to Huang's support publicly.
