Business Brief: Nvidia weighs firing Huang

Good morning. The world’s largest artificial-intelligence company is sizing up a leadership change after revelations that founder and CEO Jensen Huang had an extramarital affair with a direct report, following news of another relationship with a suspected Chinese spy.

Also on our watch today: A fight over Monday night hockey, Anthropic’s elusive (in Canada) IPO and a growing gambling problem.

In focus

Nvidia charts an uncertain next chapter

This has the feeling of inevitability, doesn’t it? Even as analysts warned that pushing out Jensen Huang would wreak havoc on the markets, even as Nvidia’s board said it had confidence in its co-founder and chief executive, and even as U.S. President Donald Trump seemed happy to let slide an affair with an alleged Chinese spy, it’s hard to imagine one of America’s most important companies being steered by a leader who might never escape questions about his exposure to the West’s greatest rival.

What appears to have brought the board’s kettle to a boil, however, was a more ordinary transgression – a second affair, this one with an executive who reported to him.

Directors were meeting to determine Huang’s fate as early as last night, the Wall Street Journal reported, hours after the New York Times published a story about an affair with Kimberly Powell, Nvidia’s vice-president of health care.

The decision deepens the uncertainty that has hung over Nvidia since Huang’s relationship with a suspected Chinese spy came to light last month.

As scrutiny mounted over the nature of Huang’s first reported affair, many were questioning whether he was the target of a “honey trap,” James Griffiths writes – claims Beijing dismissed as “groundless speculation and slander.”

The board’s decision brings a potential end of an era for the company and the industry it helped create. In the course of building the world’s top supplier of AI chips and a US$4-trillion juggernaut, Huang became the world’s most influential proponent for the technology and brought massive riches to investors who bought in early.

Even the prospect of Huang’s downfall is rocking an already fragile market and a sector that has become a flashpoint of geopolitical tension.

Including after-hours trading last night, which saw the company’s shares fall about 8 per cent, Nvidia has lost about $600-billion in stock market value since the board announced its investigation on Sunday into the first reported affair.

The company doesn’t have a clear succession plan, and boy, can you imagine trying to fill his shoes? (Or leather jacket.) Decades of worry preceded Warren Buffett’s retirement from Berkshire Hathaway, and even though Greg Abel had been his anointed heir for four years, investors shaved a cool US$59-billion off the company’s value when Buffett finally announced the handover last year.

Nvidia and Huang have been key drivers behind the development and success of the AI sector, Murad Hemmadi writes. We suppose we’ll soon find out whether Nvidia, and the industry, can keep driving without him.

Top stories

In the corners: Three Canadian cable companies complained to the federal TV regulator that Sportsnet shouldn’t be allowed to charge customers an extra $13 per month to get NHL games on Monday nights.

Eastlink, Cogeco and SaskTel filed a complaint with the Canadian Radio-television and Telecommunications Commission alleging that Rogers Communications Inc. acted in an anti-competitive manner by introducing the surcharge this season.

Anthropic anxiety: Canadian investors hoping to get a piece of Anthropic’s initial public offering will need a little luck, with American underwriters controlling the deal’s order book and final share allocations out of New York.

Unlike SpaceX’s IPO in June, which was designed to sell shares across multiple markets and to allocate a sizeable block of stock to retail investors, Anthropic’s lead underwriters are keeping the order book and final share allocations close to their vests, Tim Kiladze and Andrew Willis write.

Climate care: Trade tension and geopolitical strife have driven a shift in Canada’s policy priorities away from climate change, but major investors say they remain focused on making sure industry is preparing for a transition to a low-carbon economy.

A report grading large Canadian emitters on sustainability performance, published this morning by investor-led coalition Climate Engagement Canada, shows that accounting for climate risks is top of mind for asset managers and owners like pension funds and insurers, Jeffrey Jones reports.

Charted

What percentage of your income is it okay to gamble? Less than you think, Meera Raman writes. Online gambling data from Ontario and recent nationwide surveys suggest Canadians are wagering more than $200 a month on average – a sum vastly above guidelines for low-risk gambling. Even small, regular bets can add up over time, eating into savings and making it harder to reach long-term financial goals.

Quoted

AI is muscling its way into fantasy sports leagues, Danielle Groen reports. Its arrival is proving divisive among long-time managers of fake teams. I personally would never, because I’m already dominant based on pure human insight and proprietary analytical measures. But then, some people need all the help they can get.

Up next

More files we’re following

Clover and out: Prime Minister Mark Carney is in Ireland for a gathering of European leaders. He then travels to Manila for the first of three Asian summits.

Results: Earnings today include Canadian Tire, Brookfield and Cisco.

Morning update

Global markets were mixed ​as Nvidia shares slid in premarket trading on news that ‌its board may oust longtime CEO Jensen Huang.

Wall Street futures diverged with the Dow pointing higher, while TSX futures were little changed.

Overseas, the pan-European STOXX 600 was up 0.45 per cent in morning trading. Britain’s FTSE 100 rose 0.35 per cent, Germany’s DAX gained 0.81 per cent and France’s CAC 40 advanced 0.7 per cent.

In Asia, Japan’s Nikkei closed 0.7 per cent lower, while Hong Kong’s Hang Seng dropped 1.26 per cent.

The Canadian dollar traded at 70.19 U.S. cents.