NVIDIA Corporation (NVDA.US) Governance Crisis Escalates: Jensen Huang Hit by Another Extramarital Affair Allegation, Board Weighs Removal, Wall Street Begins Pricing In a "No Jensen" Scenario

The world's most valuable semiconductor company is experiencing the most severe corporate governance crisis since its founding. , NVIDIA Corporation (NVDA.US) CEO Jensen Huang, after admitting to an extramarital relationship with a foreign woman, was disclosed in reports on Wednesday to have had another undisclosed intimate relationship with a female executive within the company who reports directly to him. According to people familiar with the matter, the NVIDIA Corporation board is preparing to remove Jensen Huang from the CEO position, with a meeting as early as Wednesday local time to decide his fate. Affected by this, NVIDIA Corporation's after-hours stock price fell as much as 9%. Since Jensen Huang admitted the first extramarital affair to employees on Sunday, NVIDIA Corporation had fallen about 10% cumulatively over just two trading days through Tuesday, with more than US$420 billion in market value wiped out. Meanwhile, after the midterm elections the Democratic Party swept both chambers of Congress, and multiple local ballot measures that could raise the threshold for data center construction passed simultaneously, with AI infrastructure trades also under broad systemic pressure. The controversy over Jensen Huang's personal conduct, at an already fragile market juncture, has pushed NVIDIA Corporation's long-neglected "founder single-point dependency" problem to the forefront of pricing. The nature of the second relationship differs from the first According to media reports citing five people familiar with the matter who previously worked at NVIDIA Corporation, Jensen Huang had an extramarital relationship with Kimberly Powell, vice president of NVIDIA Corporation's healthcare business. Powell is one of about 60 executives who report directly to Jensen Huang, has headed NVIDIA Corporation's healthcare business since 2017, and has worked at the company for more than 18 years. Two people familiar with the matter said that during the GTC conference in San Jose in March this year, Jensen Huang and Powell were seen behaving intimately at a local hotel, and a bystander recorded the scene with a mobile phone; however, the media outlet reporting the news explicitly stated that the reporter had not viewed the video, and the report's details currently rely mainly on anonymous sources and have not been publicly confirmed by independent video evidence. Jensen Huang hung up after a reporter's call, and neither NVIDIA Corporation nor Powell commented. Unlike the first relationship, which involved an outside business person, the Powell case directly touches the core prohibited zone of the company's code of conduct. NVIDIA Corporation's code of conduct requires employees to avoid personal relationships that could create conflicts of interest, and intimate relationships between executives and their direct subordinates are widely regarded as a governance red line because of the structural power imbalance between the parties, which could compromise the fairness of compensation decisions, promotion evaluations and personnel arrangements. Existing reports have not proven that Jensen Huang specifically intervened in Powell's personnel arrangements, but the fact of a "relationship within the reporting line" is itself enough to move the controversy from the realm of private morality to the level of the board's oversight effectiveness. According to a former employee who requested anonymity because of the sensitivity of the matter, rumors of an extramarital relationship between Jensen Huang and Powell had circulated for years, partly because Powell lacks a medical or scientific background. Jensen Huang acknowledged in an internal memo on Sunday that he had been "unfaithful to my wife," saying "my actions hurt her and our children, and there is no excuse for that," but did not disclose specific details. It is understood that most of Jensen Huang's NVIDIA Corporation shares are held jointly with his wife Lori Huang and placed in trust funds. These trusts hold about 800 million shares. Jensen Huang personally holds about 70 million shares, giving him limited economic control over the company. Currently, the NVIDIA Corporation board has hired the law firm Wachtell, Lipton, Rosen & Katz, led by former Acting U.S. Attorney for the Southern District of New York Joon H. Kim, to conduct an independent investigation into Jensen Huang. In addition, a shareholder has filed a class action in federal court in San Jose, California, alleging that NVIDIA Corporation and Jensen Huang concealed his relationship with Alice Huang, misleading investors and constituting fraud. "This is going to be a very challenging situation," commented Michael O'Rourke, chief market strategist at Jonestrading. "Jensen Huang previously forecast sales growth of 70% this year. Given vendor financing and aggressive tactics, his successor will have to spend the next year putting out fires and cleaning up the mess." "If these allegations are confirmed by an independent investigation, one can only expect the board to remove him. That is the standard of corporate governance today. Worse, this is a pattern," he added. After-hours trading briefly fell below US$160, and Wall Street begins pricing in "NVIDIA Corporation without Jensen Huang" Before the removal report landed, NVIDIA Corporation's regular trading session had still posted a gain of 2.9%, closing at US$173.73, indicating some funds were trying to bottom-fish after the consecutive declines. But the after-hours news completely reversed sentiment: NVIDIA Corporation's stock price fell more than 9% at one point, breaking below US$160, and as of press time the stock was at US$160.13, down 7.83%. Over the previous two trading days, NVIDIA Corporation had fallen more than 9.5% cumulatively from pre-scandal levels, with market value shrinking by more than US$420 billion, and it also ceded its position as the world's second-most-valuable company to Microsoft Corporation (MSFT.US). Signals from the options market are also worth watching. According to reports, a trader under pressure on the stock bought 52,000 call options expiring in February 2027 with a strike price of US$195, while selling the same number of US$245 calls, paying a net premium of about US$47 million. This spread trade would only break even if NVIDIA Corporation rises above about US$204 before expiration, about 14% above Monday's closing price. SpotGamma's analysis believes the trader may also be closing old positions, lowering the strike price to increase sensitivity to a rebound, with a clear "catching a falling knife" character rather than confirmation of a short-term trend. Dec Mullarkey of SLC Management said it is worth watching how NVIDIA Corporation "handles next week's earnings call. Their CFO can handle the numbers, but the market wants to see more information about governance changes." NVIDIA Corporation is scheduled to report quarterly results on November 17 U.S. Eastern Time. "It's hard to imagine him resigning, but it's equally hard to imagine how he can stay. I think the board will ultimately be forced to push him out and establish a more traditional organizational structure. Flaws in judgment may be hard to repair with key customers." It is understood that headhunting firms have reportedly begun searching for potential successors, with rumored external candidates including AMD's (AMD.US) Lisa Su and Arm's (ARM.US) Rene Haas.