Nvidia CEO Jensen Huang Under Scrutiny: Second Affair Allegation Surfaces as Board Debates His Future

Nvidia CEO Jensen Huang is reportedly facing a second allegation of an affair, this time with a senior executive within the company, as the Nvidia board convenes to determine his leadership. The New York Times reported on Wednesday that Huang allegedly had a relationship with Kimberly Powell, Nvidia's vice president of healthcare and one of his direct reports, citing five former employees. Powell has been with Nvidia for over 18 years.

Nvidia has declined to comment on the latest allegation and has not confirmed if its ongoing board inquiry, initiated on Sunday regarding Huang's relationship with Alice Huang and overseen by the law firm Wachtell, Lipton, Rosen & Katz, will be expanded to include this new claim. The company's code of conduct addresses potential conflicts of interest stemming from personal relationships and mandates the investigation of reported misconduct.

This new allegation surfaces just days after Huang admitted to being "unfaithful" to his wife, following earlier reports of a relationship with Alice Huang, a businesswoman whom US investigators have accused of espionage for China. Nvidia's board had previously launched an inquiry into whether Huang was a target of a foreign intelligence operation, while simultaneously expressing confidence in his leadership. China has dismissed these allegations as "entirely groundless."

Further reports from The Wall Street Journal late Wednesday indicated that the board is considering Huang's removal. According to these reports, directors have also engaged an external firm to identify potential successors. Nvidia's bylaws permit a majority of its 11 directors, all of whom are independent except for Huang himself, to dismiss the chief executive "with or without cause."

Nvidia's stock experienced a significant drop, falling over 8% in after-hours trading, following a 2.9% increase to close at $173.73 on Wednesday. The repercussions of this scandal extend beyond the corporate boardroom. Nvidia's chips are integral to the global artificial intelligence infrastructure, powering everything from major US tech companies to national projects in the Gulf. The scandal has also emboldened lawmakers advocating for stricter regulations on the sale of these chips.

Analyst Dan Ives of Yorkville has estimated Nvidia's value at $300 per share with Huang as CEO, but projected it to be $225 without him. Huang, 63, co-founded Nvidia in 1993 and currently has no clear successor. Analysts have suggested chief financial officer Colette Kress as a potential interim leader.

Pressure is also mounting in Washington, with House Republicans seeking Huang's testimony and raising the possibility of a subpoena. Lawmakers from both political parties are calling for enhanced restrictions on chip exports to China. Former US President Donald Trump has referred to Huang as "an honourable guy." Huang is still scheduled to deliver the keynote address at Nvidia's GTC event in Washington, scheduled from December 1 to 3.