Two days ago, I wrote that I thought it was unlikely that Nvidia would fire CEO, Jensen Huang. I also wrote that “In situations like this, when a CEO who’s hiding something gets replaced, it’s likely that he was hiding more than one thing.” I was wrong on the first point and right on the second one. Last night (NY time), news came out that Huang was having a second affair, but this time with a direct report at Nvidia, an action that violates company policy. The WSJ and other sources are saying that the Nvidia Board is preparing to replace him.

 

If true, replacing Huang would be extremely difficult. He founded the company decades ago with product designed to improve graphics for video games. Not only did Nvidia GPUs become the gold standard for gamers, they were also being used on trading floors to handle multiple high-definition displays and in computers designed for content creators to handle video editing. In recent years, Huang recognized that the capacity of Nvidia GPUs to handle simultaneous computations meant they’d be ideal for training AI systems. Nvidia then became the market leader for data centers with every major AI company almost begging for a greater allocation of this year’s model of AI accelerator.

 

Recent poor judgment aside, Huang has a reputation for an incredible work ethic with dozens of people reporting directly to him. I’ve read that he was involved in product design and operations. He was the company spokesperson and was the person who got deals done as Nvidia’s most effective salesperson. He interacted with the CEOs of companies and Heads of State. There is no succession plan in place and no one person on the planet that I know of who can step directly into his shoes.

 

Since early October, Nvidia stock has lost almost $2T of market cap, and much of that is due to the prospect of him no longer running the company. The Nvidia Board is in a no-win situation. There are people advocating that the Board shouldn’t remove Huang from his position, and instead, put the subject to a shareholder vote. I have no idea what the legal implications are for a Board that doesn’t act on its responsibilities; but rather, delegates them to shareholders. The fact that this is even a public consideration speaks to Jensen Huang’s importance to what was recently the world’s largest company by market capitalization.

 

Here are my updated thoughts on the situation. I caution that much of this is speculation based on what I’m reading rather than confirmed knowledge. The known facts are changing quickly and as we understand more, I will update my opinions.

 

• Earlier this week, I wrote that Huang stepping down/being fired would be a market event. I thought it would cause the S&P 500 and NASDAQ to fall, the Nikkei to fall more, and the Korean market to get hammered. I am writing this at 4pm in Tokyo (2am in New York) and the market is strangely calm. S&P 500 futures are down 46bp (.46%). Nasdaq futures are down 101bp (1.01%). The Nikkei (Japan) spent most of the day up and dipped late. My screen is showing it down 70bp now. The KOSPI (Korea) was down small all day and I’m seeing it down 61bp right now. When markets are closed, and traders want to go “risk off”, Bitcoin is often a source of liquidity. It’s down 1.6% since 4pm in NY. There’s still time for people to start to absorb the news and get worried, but as of now, the selling has been orderly and much less severe than I had expected.

 

• One key piece of news that’s come out in the past two days is the reasonable speculation that Megaspeed was evading US export restrictions by buying Nvidia GPUs in Singapore and renting them to Chinese companies. This seems likely to me. China is the world’s second-leading developer of AI and Singapore has no obvious need for all of those GPUs. I wrote as far back as January of 2025 that one way China was evading US restrictions on GPU exports was renting them by the hour from international data centers. In this case, Nvidia had been disclosing sales in Singapore and stopped doing so last quarter. That timing doesn’t prove anything, but it is suggestive.

 

• A short seller figured out Huang was likely having an affair with someone with ties to the CCP and was likely evading export controls. Part of his research process was speaking with people at Nvidia. Two days ago, I wrote that Huang had hired a PR firm that specializes in sex scandals and asked Nvidia insiders to Cc the firm on communications. The Board has known (or should have known) about this issue for a long time. They will get sued.

 

• So, if Nvidia insiders have known about this conduct for at least a year and a short seller wrote about it about six months ago, why is the news just coming out now? Any answer to this involves speculation, but the most compelling answer I’ve seen to this question is the timing was tied to the US Congressional elections. The Democrats ran against data centers and the issue was part of their victory. Huang has had a close relationship with President Trump and has lobbied him directly to sell GPUs to China. There are two other key considerations.

 

• • First, the CEOs of both OpenAI and Anthropic are on the far left politically. They’re also asking for more regulation of their industries. This past summer, I wrote that their cries for regulation aren’t about public safety. If that were the case, they could slow down development on their own. It’s common for big companies in an industry to ask for more government regulation. While it tends to make their business less profitable, it prevents new competition from gaining ground as upstarts have to face impediments that the big companies didn’t when they were small.

 

• • Second, Huang has been advocating for open weight models while OpenAI and Anthropic want controlled closed models. In my opinion, one of the biggest dangers of AI is it gives people “the answer” instead of directing them to primary sources. When you can download a model and adjust its parameters, you have some control over how it works. Closed AI models can provide effective censorship without actually banning the “wrong” answer.

 

• Both big government and big AI companies want control over deciding what qualifies as the “right” answer. Huang was always going to have a fight on this issue. Is it crazy to think people knew his weakness and exploited it a week after a change of control in DC? None of this should be read as an excuse for Huang’s terrible judgment and bad decisions. I’m speculating on the reasons for the timing and seeing who benefits from his ouster.

 

• Credit to Quoth the Raven…He’s been arguing that Huang’s poor decisions wouldn’t be limited to just one affair. While nothing is proven yet, Huang has admitted to having one affair with someone who might be a Chinese spy. It seems that he had a second affair with someone who worked for him. It’s likely that he was using Megaspeed in Singapore to evade US export restrictions and make high-end Nvidia product available to Chinese developers. If it gets worse, here are the things I’m most concerned about right now:

 

• • Nvidia’s investments in other AI companies and its circular financing deals have earned it the nickname “Bank of AI”. The Board and outside auditors are going to have to start looking at all of these deals without Huang there to reassure everyone. We might start finding out more about the AI trade that has been driving the US equity indexes for the past few years.

 

• • There have been rumors for the past couple of years that Nvidia has engaged in antitrust practices and either punished or threatened to punish companies that bought AI accelerators from competitors. Every part of Nvidia’s business could be investigated and there are people with both business and political motivations to pursue this. ($AMD is up about 10% between yesterday and aftermarket trading.)

 

• One thing that doesn’t concern me is Huang’s Nvidia ownership. There are some who are speculating that if Huang gets a divorce, it would mean that his wife could end up with control of Nvidia or create a situation where she had meaningful influence. I don’t know if Huang is heading for divorce and if so, what his wife would request. However, Huang owns a little more than 3 ½ % of $NVDA stock. In the event of a divorce and in the event a Judge splits assets down the middle, that would leave Lori Huang with less than 2% of the company’s stock. She’d be worth tens of billions of dollars, but the idea that she’d have some sort of operating control at the company isn’t realistic.

 

• This isn’t relevant yet, but Huang already has a potential job offer. When someone on X suggested that Elon Musk should hire Huang, Musk responded that doing so would be an honor. Imagine Huang heading up xAI or taking control of the Terafab plant. Just please have someone on his security detail background check everyone he meets.

 

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