Should Jensen Huang be fired as Nvidia CEO? Some observers think it will help China, leave a leadership vacuum

Jensen Huang may have been ousted as Nvidia CEO by the time you read this. But some analysts argue he should not be fired over his extramarital affair with alleged Chinese spy Alice Huang, warning it would create more problems than it solves. Nvidia's board is meeting on Wednesday (Nov 12) to decide Huang's future. Under Nvidia's bylaws, the 11-member board can remove him by a simple majority. No decision had been announced at the time of writing. Meanwhile, reports emerged that Jensen had a second affair, with Nvidia healthcare executive Kimberly Powell.

Forced ousters of CEOs: Bad for business?

The Kobeissi Letter shared an analysis on X showing that forced CEO ousters have not helped the companies involved. Several industry observers, investors, venture capitalists and commentators share the same view. It urged the board not to fire Huang, mainly because there is no clear replacement, arguing he is irreplaceable to Nvidia's AI leadership.

It cited a study of 187 forced CEO departures from S&P 1500 firms, which found that removing overperforming leaders led to negative long-term stock returns.

It also noted that Amazon retained Jeff Bezos as CEO after his affair became public in 2019, and the company's stock rose 108 per cent by 2021. It warned against hasty action over personal misconduct.

It noted that Nvidia stock had fallen 35 per cent in 26 trading days, nearly half of it due to the scandal, and that Huang's removal was now about 80 per cent priced in.

Given the stakes for Nvidia and the AI sector, it called for a special shareholder meeting with an advisory vote.

Lack of a clear successor could be a problem for Nvidia

Dan Ives of Yorkville Ives, a prominent tech analyst, called Huang the "core DNA of Nvidia and its AI success" and said he is not replaceable. He described Huang as the "central nervous system" of the broader American tech and AI ecosystem, and estimated Nvidia could lose 25 to 30 per cent of its market value if Huang exits.

Ben Thompson, an independent tech analyst, wrote that without evidence of a clear betrayal of US interests, "it is in the interests of the US that Huang continue to be CEO of Nvidia."

‘Ousting Huang would benefit China’

Gavin Baker, managing partner at Atreides Management, who has known Huang for nearly 30 years, said he does not believe Huang would knowingly disadvantage the US or Nvidia. He has argued that Huang's push to export less powerful AI chips to China serves US national security, and that removing him could ultimately benefit China.

Stacy Rasgon, senior analyst at Bernstein Research, said shareholders and boards do not want Huang to step down. Bernstein analysts described Nvidia as "not an ordinary company and Jensen is not an ordinary CEO; he IS Nvidia", noting he sets long-term strategy and directs most key decisions.

Shaun Maguire, a partner at Sequoia Capital and an early Nvidia investor, said Huang "did something incredibly dumb" but remains "irreplaceable for America's AI leadership". Elon Musk endorsed the post.

Maguire cautioned against actions that would "nuke our AI industry because China ran a successful intel op."

Nvidia stock will bleed further if Huang is ousted

Investor Michael Monaghan called Huang irreplaceable and indicated his firm would sell Nvidia shares if he exits.

Semiconductor analyst Jay Goldberg said there is "no ready alternative" to Huang and that his departure would disrupt Nvidia's decision-making.

The real problem is Huang's outsized role at Nvidia

These views stem from Huang's hands-on approach and outsized role at Nvidia, where he has dozens of direct reports. Before the scandal broke, he enjoyed rock-star status as the public face of the AI boom. Observers point to the lack of a succession plan or a ready internal candidate.

This will compound matters, particularly if investigations uncover no clear corporate or national-security wrongdoing beyond personal misconduct. And spy cases are rarely resolved conclusively.