The Nvidia investor’s guide to (maybe) losing your CEO

{"text":[[{"start":4,"text":"Tech folks love to put faux-scientific probabilities on unpredictable things. Take P(doom), for example, the much-debated likelihood of AI eradicating humankind. After the revelation of Nvidia chief Jensen Huang’s extramarital relationship with a woman suspected of being a Chinese spy, investors in the world’s biggest chipmaker are doing P(doom) calculations of a different kind."}],[{"start":26.2,"text":"Chief executive departures are fairly common — even involuntary ones. Roughly one in seven CEOs who exited Russell 3000 companies in 2025 were forced out, data from the Conference Board shows. Some take a chunk of shareholder value with them; in some cases, the opposite is true."}],[{"start":43.4,"text":"Huang’s predicament, which is being probed by an independent Nvidia board committee, is unusual. When McDonald’s and Intel parted ways with bosses over consensual relationships with employees, shares in each fell less than 3 per cent in response. At retailer Kohl’s, the firing of chief Ashley Buchanan in 2025 for his relationship with a vendor pushed the stock up 8 per cent."}],[{"start":65.12,"text":"At superstar-CEO companies, though, the stakes are far higher. Tesla may be a better guide. In 2018, the US Securities and Exchange Commission sued the company for misleading shareholders, and asked that Elon Musk be removed as chief and chair. The stock fell 15 per cent, according to LSEG data — presumably reflecting a low estimated likelihood of him actually being defenestrated."}],[{"start":88.48,"text":"Even closer to home: the ejection of OpenAI chief and co-founder Sam Altman in 2023 for being “not consistently candid” with his board. While OpenAI isn’t listed, the news shaved almost $50bn off the market capitalisation of part-owner Microsoft. When Microsoft said it had hired Altman the following Monday, the software giant’s valuation rose more than $50bn."}],[{"start":110.36,"text":"For context, OpenAI was valued a few months later at almost $90bn, according to PitchBook — by which time Altman had returned to his post. Microsoft’s investment wasn’t conventional equity, thanks to an odd capped-profit structure, but the size of the Monday gain suggests Altman accounted for more than half of the company’s worth."}],[{"start":129.96,"text":"Could Huang account for that large a share of Nvidia’s $4.5tn pre-scandal market capitalisation? Even without him as CEO, the company has several years’ worth of pent-up customer demand. But without its hands-on chief, the company would probably shed some of its dominant market share and its generous pricing power, reflected in its gross margin."}],[{"start":null,"text":"

"}],[{"start":151.12,"text":"Consider a back-of-napkin analysis. Nvidia is expected to make $930bn of gross profit in calendar year 2030, Bank of America analysts estimate, assuming it keeps 72 per cent of the GPU chip market and its 73 per cent margin. But if its market share falls to a less dominant 50 per cent, and profitability sags to 65 per cent — halfway towards AMD’s — its forecast profit would be $300bn lower."}],[{"start":178.92,"text":"Assuming the multiple at which investors value a dollar of profit remains unchanged, that suggests $1.4tn of lost value, or 30 per cent of the company’s worth before Huang’s activities came to light."}],[{"start":191.24,"text":"As of Tuesday, investors weren’t expecting anything that severe. Nvidia shares had fallen 10 per cent. Some of that may reflect that even if Huang stays, the company will have lost some shine and a degree of political influence. But in total, it’s just a third of what Lex’s simplified calculation suggests could be lost if he ceded his job."}],[{"start":211.2,"text":"In other words, expressed in terms of Silicon Valley pseudo-probability, Nvidia’s own version of P(doom) is at present somewhere around 30 per cent. Forget predictions of AI catastrophe: that’s the new number to watch."}],[{"start":226.24,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794389248_7515.mp3"}