Nvidia shares fell 4.34% Thursday after CEO Jensen Huang announced his immediate resignation from the company and its board. The stock declined from earlier losses of as much as 14% but finished slightly above the $4 trillion market cap level.
CFO Colette Kress will serve as interim CEO until a new leader is appointed. Harvey C. Jones, former CEO of Synopsys, will become Nvidia's first-ever board chair.
Huang's resignation follows reports of multiple extramarital affairs. On Sunday, Huang admitted to having an affair with Alice Huang, an executive at cloud company Megaspeed, whom U.S. intelligence officials believe is a spy for China. The New York Times reported Wednesday that Huang also had a relationship with Kimberly Powell, vice president of health care at Nvidia, who reports to him. Reuters reported Thursday that Huang had an "intimate relationship" with a second unnamed employee.
Alice Huang is tied to Huawei, Nvidia's biggest competitor in China, and may have owned stakes in Chinese businesses benefitting Huawei while doing business with Nvidia, according to CNBC's reporting.
Wall Street analysts told CNBC before the resignation that Huang's departure could trigger a 20% stock decline. Bernstein slashed its price target on Nvidia shares by half, from $400 to $200, on Thursday. Senior analyst Stacy Rasgon at Bernstein said Huang's affair with a direct report makes it "much tougher for the board to leave him in position."
Rasgon told CNBC that Huang is Nvidia's visionary and questioned who could replace him. Richard Reyle, chief investment officer at Questar Capital Partners, said Nvidia's lack of a succession plan makes the stock "uninvestable."
Nvidia's stock is down more than 20% over the last month.