Reports: Nvidia board to consider ousting CEO after second affair allegation

Well, there are new developments to tell you about now in the unfolding scandal surrounding NVIDIA CEO Jensen Huang. The Wall Street Journal reporting the company's board is planning to oust Huang as CEO. This afternoon, the New York Times reports that Huang also had another affair, this time with another NVIDIA executive. The paper reports Huang had a relationship with Kimberly Powell. She's the company's vice president of health care. The two were reportedly seen being affectionate at a hotel in San Jose during an NVIDIA conference in March. Neither Wong nor Powell nor NVIDIA have commented. All right. Let's get some more now on these latest developments. And we want to bring in Vincent Gerolamin, who is a senior fellow at the Berkeley Center for Law and Technology. Vincent, we appreciate the time this afternoon. Thank you so much for joining us here. So we hear the reports this afternoon, NVIDIA preparing to force out CEO Jensen Wong. How do you think the company's board reached this point where they feel that this is the right move to make? Well, it was probably not an easy decision for them to make because Wong is a very powerful CEO and this is a huge company and he's one of those, he's like a Steve Jobs type CEO. All right. But these are really bad, two really bad examples of kind of behavior. The first one with the Chinese woman is quite bad. And the second one with another member of his company, who's a subordinate of his, is also very, very bad. A very similar thing took down the CEO of McDonald's a few years ago. OK, how serious, though, is this not only for Jensen Wong, but for NVIDIA, especially as it is known as a leader in the AI industry? It's very serious. NVIDIA was, until recently, the largest company in the world. And that was because they had this huge monopoly on chips. Other people have been catching up to that. So that's kind of a threat to them as well, too. But also, this is a huge deal for NVIDIA. Because if it turns out that they knew that they were exporting chips to a company that was then going to export them to China, that's very, very bad news. And that heat could... Really kind of start to slow them down and allow others to take their spot. Yeah, what does this signal about, you know, sort of the AI boom? A lot of people are kind of sort of trying to read into this here. We're seeing NVIDIA stock continuing to fall here. And we know, obviously, as you mentioned, that NVIDIA's chips are kind of what powers the AI industry at this moment here. What are the broader implications for AI? Yeah. Mathematically, we're going to have an AI bubble pop at some point. It's just not possible for all of the AI companies to do as well as their stock values would kind of imply. And often at the beginning of a pop, we look for something called a black swan event, where there's an event that It kind of triggers a cascade of. collapse after that. And a lot of people right now, a lot of legal experts are starting to wonder if this might be the beginning of that cascading event, especially because NVIDIA is so central to our view of the whole AI ecosystem. Yeah. And what about for investors? You know, how do they approach all of this? We just showed a graph showing how Nvidia stock has really slid over the last couple of days since the initial news broke. And now you have reports of a potential second affair and then also reports about Jensen Wong's ouster. Yeah, it's very hard because it's hard to bet against NVIDIA. They've done so well over the past several years. But there's kind of two possible outcomes here. Number one is that they're going to bounce right back, in which case people could buy in NVIDIA at a discount. The other is that this is the beginning of a kind of a bigger slide for the company, in which case it could be a pretty catastrophic for investors. So I would just tell people to You know, invest. Cautiously, at a really sensitive time like now. Let me ask you about sort of the political aspect of this story here, because the reporting that's been done by the New York Times has found that going back all the way to last year, U.S. intelligence had this information that Jensen Huang was in a relationship with a woman who was suspected of being a spy for the Chinese government. President Trump was even briefed on this, but apparently didn't take any action. Can you help us understand why... That information didn't set off more alarm bells for U.S. officials? You know, it's it's kind of hard to not get a little conspiratorial when you start to hear about all of this, because the U.S. government knew about this. They didn't take actions. It's kind of interesting to think about all the different incentives here. First off, NVIDIA did have a bit of an incentive for this or this kind of arrangement to work because it could mean that they could sell more chips. And for the U.S. government, NVIDIA is kind of our big company that is really propping up the economy, and there's a chance that they didn't want this to, you know, collapse the U.S. economy, and then they decided not to take action on this. It's hard to read in on any of that too much, though, and kind of predict everyone's thinking. But it is odd that the government knew about this and didn't take any action. Yeah, certainly. Yeah. Okay, so finally for you, where do you think this goes from here? Do you think that Jensen Huang will, in fact, be ousted from NVIDIA? And then how does the company sort of work to reestablish itself? Yeah. So think about Apple after Steve Jobs is a really good example of this. Everyone, you know, everyone associated Apple with Steve Jobs and they thought there's no way that this company is going to do as well after that. And then after Steve Jobs leaves, Tim Cook takes over and Tim Cook has been an amazing CEO for Apple and has like tripled their valuation over already an enormous valuation. So it's very popular. Possible that NVIDIA will just do fine after this, and there's a lot of really great leaders in that company, and one of them will step up and become the CEO, and they'll be fine. It's also possible that Jensen Huang was really kind of the key person here, and maybe it'll collapse. Kind of hard to predict, though. All right, but no doubt there probably will be a rough period ahead for NVIDIA here as this scandal continues to unfold. Appreciate your perspective. Really good to have you on here.