Nvidia's $190 Billion Wipeout and the Board Too Close to Fire Its Founder

Nvidia lost roughly $190 billion in market value on Monday, with shares closing down about 4.3% after an intraday drop of 8.8%, as investors weighed the scandal surrounding CEO Jensen Huang. The co-founder has acknowledged an affair with Alice Huang, a former Megaspeed executive suspected of being a Chinese spy. On Sunday, the same day the board opened an independent investigation, it publicly declared confidence in its CEO.

For most chief executives, that sequence ends with a resignation letter. At Nvidia, even removing the CEO looks complicated, and the numbers explain part of the hesitation.

What are the board's two problems?

The first is reluctance: directors may not want to force out the man who built the company. The second is arithmetic of a different kind—there is no obvious successor. "In most cases of scandal at major corporations, the CEO is either replaced or put on leave while investigations are carried out and appropriate responses decided," Jo-Ellen Pozner, an associate professor of management at Santa Clara University's Leavey School of Business, told Fortune.

The likeliest outcome, according to one governance scholar, is a diminished rather than departed CEO. "I don't expect a 'stay or go' decision. It will be more like a 'stay, with less,'" Jason Schloetzer, an associate professor of accounting at Georgetown University's McDonough School of Business, told Fortune. He suggested the board could:

• appoint a clear second-in-command;
• communicate more openly about succession planning;
• reshuffle board seats to signal stronger oversight.

Huang would remain CEO, under closer supervision.

Why is there no heir?

At a typical large corporation, layers of senior management supply potential replacements. Huang has built an unusually flat structure, with dozens of direct reports and few layers of hierarchy—a model in place since the company's founding in 1993. Pozner calls it "an extremely unusual organizational structure."

"I also imagine that he did it in part to prevent politics and political factions within the organization," she said. The structure, she argued, "had the effect of suppressing the emergence of potential successors, probably diminishing conflict and consolidating power in the hands of Jensen Huang." Nvidia has not publicly identified a successor. An insider promotion would raise credibility questions; an outsider carries risks of its own.

How captive is the board?

Nvidia has no board chair. Huang works with lead independent director Stephen Neal to set board agendas, and management prepares the information directors receive, according to company filings. Of the 11 board members, three, including Huang, have served continuously since 1993, another joined in 1997, and Mark Stevens served from 1993 to 2006 before returning in 2008, per the 2026 proxy statement.

"They've become billionaires because of their affiliation and ownership of this company. And just working together with the same CEO since the inception of the organization makes it impossible for them to act as outsiders," Pozner said. She called it "a captive board"—"not unlike Tesla's"—that is unlikely to have "taken succession planning very seriously."

The board's Sunday statement said a committee of independent directors, assisted by outside counsel, would oversee the investigation. It also said directors saw no reason to believe national security or Nvidia's secrets had been compromised.

What about Washington and the courts?

The affair has produced rare bipartisan agreement. On Monday, Senator Elizabeth Warren and Senator Jim Banks issued a joint statement demanding answers from Nvidia and tighter restrictions on advanced AI chip exports to China. Nvidia and Huang also face a proposed shareholder class action alleging they misled investors about Huang's ties to Alice Huang. President Trump said the FBI was examining the relationship.

A company spokesperson told Axios that Huang was committed to continuing as CEO without interruption. Michael Monaghan, a partner at Founder ETFs, told Axios his firm would sell its Nvidia holdings if Huang left, calling him in some ways "irreplaceable." Prediction markets agree: Polymarket traders put the odds of Huang resigning or being removed by year-end at 16%.

What could still end Huang's tenure?

Candor, not the affair itself, is the genuine risk. "Boards remove CEOs over candor issues," Schloetzer said. "What did he tell the directors, and when? Can he be trusted with board communications going forward?"

Pozner questioned whether the current board could even choose a successor, calling its posture "very short-sighted and is exacerbating the danger that Nvidia is in." She suggested several long-serving directors could step down, replaced by experienced directors from outside Silicon Valley, creating a board capable of "selecting the right successor—even if they plan only a temporary substitution—to weather the coming storm."