Nvidia CEO Huang resigns, Kress becomes interim CEO: Looming questions abound

Nvidia CEO Jensen Huang has resigned and the company’s board of directors named CFO Colette Kress interim CEO. Nvidia said its search for a new CEO will include internal and external candidates. Nvidia’s board appointed Harvey C. Jones as Chairman.

The resignation ends the first phase of a scandal surrounding that started on Sunday. Nvidia’s board outlined the Huang’s resignation in a statement.

Key items:

• Kress will continue as CFO while serving as interim CEO. Kress has been CFO since 2013 and is one of the architects for Nvidia’s efforts to fund the AI infrastructure buildout.
• Jones is a long-time venture capitalist and former CEO of Synopsys.
• Jones said Kress will be supported by “an experienced leadership team that has been instrumental in executing NVIDIA’s strategy and advancing its technology roadmap.”
• Kress noted that Nvidia “will continue advancing the work that has made NVIDIA a leader in accelerated computing and AI, and execute on the opportunities ahead.”
• Nvidia reports earnings Nov. 17 and putting Kress in charge means Wall Street will have a familiar voice. Kress has led the earnings calls with Huang largely handling the Q&A.
• The board thanked Huang for his “immeasurable contribution.”

Nevertheless, it’s clear that Nvidia lacked a succession plan.

A rapid spiral

The unraveling of Huang only took a few days.

The Wall Street Journal reported Wednesday that Nvidia was about to oust Huang once The New York Times reported that Huang had another affair with a Nvidia employee. Huang’s first affair was with Alice Huang, the CEO of Megaspeed who is alleged to be a spy.

Here's the timeline from the last four days.

• Nov. 8: Nvidia's board said it was "initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort."
• Nov. 8: Huang sent an email to the company that apologized for the affair and said he'd cooperate with any investigation.
• Nov. 10: Nvidia said it has retained U.S. Attorney of the Southern District of New York Joon H. Kim and his firm Wachtell, Lipton, Rosen & Katz to conduct the independent investigation.
• Nov. 11: The New York Times reported that Huang had an affair with Nvidia's VP of healthcare Kimberly Powell and the Wall Street Journal reported that the CEO was about to be pushed out. Bloomberg reported that Nvidia's board is working with an outside firm to find possible replacements and weighs a temporary CEO.
• Nov. 12: Huang resigned and Kress took over as interim CEO.

Looming questions

In the short term, Nvidia already has contracts and backlog in place to run on autopilot for a bit. Longer term, however, there are some things to watch going forward.

How will the succession be handled? Nvidia doesn’t appear to have a solid succession plan and Kress will buy the company time to do a thorough search. Prediction markets have Nvidia's Ian Buck, VP of Hypersale and HPC, Arm CEO Rene Haas and AMD CEO Dr. Lisa Su as candidates for the CEO gig. Nvidia will cast a wide net and look to find an operator, visionary and sometimes diplomat.

Can Nvidia keep the AI financing efforts going without Huang? Critics call Nvidia's financing of the AI industry circular financing. Others simply refer to the financing practices as the Bank of Nvidia. What's unclear is whether Nvidia can keep the financing going without Huang? Neoclouds will likely be asked more about funding.

Will Nvidia be distracted? Nvidia has enjoyed a massive lead in AI infrastructure, but the competition has only ramped. Google TPUs, Amazon Trainium, AMD’s AI accelerators and racks and Broadcom’s XPUs are just some of the competition. Without its CEO, it’s unclear Nvidia can keep its momentum.

What revelations are next? This Huang saga extends into politics as well as the US vs China AI race. There won’t be a one-and-done reveal. The big question is how long it will take to reveal everything.

Constellation Research CEO R "Ray" Wang made the following points about Huang's resignation and search for a new CEO.

• Key man risk means it's very hard to replace Huang.
• That said the product roadmap is set for the next 5 years.
• Jensen is synonymous with AI and is the visionary.
• Issue is the liability from the potential intelligence breach.