Pressure mounts at Nvidia as CEO Jensen Huang’s fate hangs in balance

Nvidia Corp. was under growing pressure late Wednesday to remove chief executive Jensen Huang after reports that he had two affairs, one with an executive reporting to him and another with an alleged Chinese spy.

The semiconductor giant is now confronting nervous markets, geopolitical intrigue and concerns about the fallout for the entire artificial intelligence industry.

On Wednesday, The Wall Street Journal reported that Nvidia’s board was meeting and preparing to oust the company’s founder and public face.

The company supplies most of the chips and hundreds of billions of dollars driving the current AI boom. Mr. Huang, 63, is one of the technology industry’s most recognizable and powerful figures, and a leader who has helped define today’s AI sector. His exit would leave a vacuum at the top of the industry.

Nvidia’s directors had launched an independent investigation into Mr. Huang on Sunday, after claims that he had been the subject of a foreign intelligence effort. The same day, the chief executive acknowledged he had been unfaithful in his marriage. The other person involved in the extramarital affair has been identified as Alice Huang, an executive at Singapore-based Megaspeed International, a provider of AI infrastructure.

The U.S. Commerce Department had been investigating whether Megaspeed helped circumvent export controls by moving Nvidia’s specialized AI chips to China. Megaspeed has said it follows the law and denied any illicit hardware transfers. A Trump administration memo had also identified Ms. Huang as an asset of Beijing’s security ministry, The New York Times reported. China has denied any such spying.

On Wednesday, The Times also reported that Mr. Huang had an extramarital relationship with Kimberly Powell, Nvidia’s vice-president of health care.

The Globe and Mail has not independently verified the reports. Nvidia did not immediately respond to The Globe’s request for comment.

Nvidia’s shares have whipsawed this week after Mr. Huang’s first affair admission. On Wednesday evening, its stock price fell sharply in after-hours trading following reports that Mr. Huang could exit and leave behind a leadership vacuum.

Nvidia, and Mr. Huang, have been integral to the development and success of the AI sector.

The Taiwan-born electrical engineer co-founded the company in 1993, and it became a leading maker of graphics hardware used in gaming computers. But in the late 2000s, computer science researchers began using Nvidia graphics processing units (GPUs) to train deep learning models, then an out-of-favour form of AI.

In 2012, University of Toronto professor Geoffrey Hinton and his students Ilya Sutskever and Alex Krizhevsky proved the power of that approach with a major breakthrough in image recognition; their model was trained on Nvidia GPUs. Mr. Hinton went on to co-win the Nobel Prize for his work on AI, while Mr. Sustkever co-founded OpenAI, the maker of ChatGPT. He has since departed to launch the startup Safe Superintelligence Inc., which aims to develop systems that exceed human smarts.

Today, Nvidia is by far the market leader in the computing hardware that’s used to train and run the most advanced AI models. The firm reported a US$118-billion net profit on just under US$178-billion in revenue across the two fiscal quarters ending July 26. That was up from US$45-billion and almost US$91-billion, respectively, over the same period last year. Nvidia’s hardware is a hot commodity for cloud providers, and it typically makes up the largest single cost for all the new AI data centres being built around the world.

In addition to selling the GPUs that fuel the AI boom, Nvidia is helping to fund many of the developers driving it. The California-based company has committed tens of billions of dollars each to OpenAI and chief rival Anthropic. It also holds equity stakes in many of their upstart competitors, including Toronto-based Cohere, Mr. Sutskever’s SSI and SpaceX.

Nvidia has also provided financing or made commitments to buy compute from several smaller cloud providers that use its chips. They include IREN Ltd and CoreWeave Inc., which both operate Canadian data centres, and Crusoe, Inc., which plans to build such facilities. Meanwhile, Brookfield Corp. is one of six major financial institutions that have collectively pledged to raise up to US$500-billion for a partnership with Nvidia.

That web of deals has led to concerns that Nvidia may be helping blow up an AI bubble, or at least may be particularly vulnerable if it pops. Mr. Huang – whose signature leather jacket and rockstar reception at tech events have attracted considerable coverage – routinely causes the share prices of companies and whole sectors to rise and fall with his public comments. His multihour keynotes at Nvidia events were watched by thousands of people in person, and streamed by millions.

What Mr. Huang did not have was a designated successor or plans to exit. He has said he has as many as 60 direct reports, a huge number for the chief executive of a public company.