Jensen Huang resigns as CEO
Jensen Huang resigned as Nvidia president, CEO, and board member on Thursday. The company gave no reason for his resignation. He admitted to being unfaithful to his wife of 40 years in a message to employees on Sunday. The board investigation follows reports of two affairs, including one with Kimberly Powell, the vice president of healthcare, and another with Alice Huang, an executive at Megaspeed. The New York Times reported that Huang had a close relationship with an executive at a Singapore chip buyer under US export-control investigation. U.S. intelligence reportedly assessed Alice Huang as a Chinese intelligence asset, though no law enforcement agency has presented hard evidence against her. Nvidia stated the board has no reason to believe secrets or national security were compromised. Colette Kress, the CFO since 2013, takes over as interim CEO while keeping her finance role. The board also named Harvey Jones, formerly of Synopsys, as its first-ever chair. I find the board’s decision to oust a founder over personal affairs while the company faced intense scrutiny over export controls to be a massive management failure. Three Republican committee chairs were preparing a subpoena. Nvidia shares fell 14% at the Thursday opening bell, wiping $500 billion from U.S. stocks in a single minute. The company shed more than $1 trillion in market value this month.
Crypto markets react to Nvidia collapse
The Nvidia collapse caused a massive selloff in the crypto markets. Bitcoin fell 4% to a twelve-week low near $68,000, dropping from above $76,000 earlier in the week. Ethereum lost 3%, falling below $2,000 to $1,960. Solana, BNB, and XRP all dropped between 3% and 5%. The broad market index finished down 4% on the day and 7% for the week.
| Asset | Price/Movement |
|---|---|
| Bitcoin (BTC) | $69,200 (-5%) |
| Ethereum (ETH) | $1,960 (-3%) |
| Solana (SOL) | $81 (-2%) |
| HYPE | $74 (+5%) |
| ZEC | $965 (Even) |
The U.S. Department of Justice obtained court approval to seize $1.2 billion of the $6.4 billion stolen from Binance on October 29, which was part of the $2.7 billion frozen so far by authorities. This seizure follows the dismantling of a North Korean scheme the FBI calls FaceStealer, which took more than $400 million over 18 months. Binance reported Thursday afternoon that it completed coverage of all assets affected by its $6.34 billion hack. The exchange published an expanded Proof of Reserves snapshot covering 44 cryptocurrencies. This snapshot showed user Bitcoin balances at roughly 687,900 BTC, a 0.35% increase from November 4. Ether holdings reached 3.48 million, up 1.04%, while USDT holdings fell 3.68% to about 928 million tokens.
Failed forecasts and tech backlash
Tech founders and investors criticized the Nvidia board for the decision. Changpeng Zhao, the founder and former chief executive of the recently hacked Binance, took to X to claim that "it’s a mistake for Nvidia to let Jensen resign" following the sudden announcement. Epic Games founder Tim Sweeney called the exit "a sad day for NVIDIA, developers, America, and all humanity." Elon Musk responded to a user asking him to hire Huang by saying, "That would be an honor." I believe the fear among developers that Nvidia will abandon open-weight AI models is entirely justified. Jun Song, an open-source AI advocate, argued that Nvidia leads the open-source movement and that losing Huang weakens the defense against companies that restrict advanced models to proprietary services. This fear exists because Nvidia agreed in September to acquire the open-source AI repository Hugging Face for $12.9 billion.
Nvidia’s stock decline has destroyed previous price forecasts. The company’s common stock, NVDA, fell 26% over the past month and 8% this week. Analysts slashed their price targets immediately following the news. Evercore ISI cut its target from $465 to $186 per share, while Bernstein halved its $400 target to $200. Melius dropped its target to $185, and Goldman Sachs lowered its target to $220. Citi moved its target to $225, while JPMorgan moved to $215 and RBC moved to $230. Stifel chose $205, and Needham landed at $200. Bank of America trimmed its target to $280, and Rosenblatt lowered its 12-month target from $390 to $300. In October, options traders priced the odds of Nvidia hitting a $6 trillion market cap at 66%. Now, Polymarket traders price the odds of a $6 trillion valuation at single digits.
