Huang quits Nvidia, raising doubts over AI deal funding

Jensen Huang resigned on Thursday, November 12, as Nvidia's ↘ 5.19% president, chief executive and board member, effective immediately. Chief Financial Officer Colette Kress will serve as interim CEO, according to the company. Investors are now asking whether Nvidia will keep funding the AI buildout without the founder who arranged most of its deals. Investors and analysts fear new leadership could dampen Nvidia's willingness to bankroll data centers and its own customers through equity stakes and guarantees.reuters.com+1

Huang's exit followed reports of two extramarital affairs, one of them with a woman U.S. intelligence agencies concluded was spying for China. His departure ends a 33-year run.nytimes.com

A web of guarantees

Nvidia's obligations include a $105 billion phased guarantee tied to an Ohio data center that OpenAI and SB Energy are planning, plus a pledge to backstop up to $125 billion of a $500 billion Wall Street credit program. Columbia Business School professor Stijn Van Nieuwerburgh puts Nvidia's total commitments at about $400 billion. That is still a small share of its market value. "The company would have to get to the brink of extinction before all these guarantees come into jeopardy," he told CNBC.cnbc.com

Other tallies are higher. Yahoo Finance counts about $530 billion in commitments and guarantees in Nvidia's latest filing, including about $65 billion to rent back cloud capacity from companies such as CoreWeave ↘ 7.85%. Yahoo also noted that Kress, who signed off on these deals as CFO, now decides how many more to make.finance.yahoo.com

"I think the fear is that the music might stop," Ten Cap portfolio manager Jun Bei Liu told Reuters.reuters.com

Neoclouds take the hit

CoreWeave had rallied after its earnings on Wednesday, but its shares fell on Thursday before recovering from their lows. Nebius Group ↘ 16.84% dropped sharply after releasing disappointing quarterly results. South Korea's Naver, in which Nvidia holds a $1 billion stake, also slid. Meanwhile, rivals Advanced Micro Devices ↗ 5.32% and Broadcom ↗ 4.98% rose.huffpost.com+3

Not everyone expects demand to falter. "Nvidia's core asset is its advanced GPUs, which still have no real substitute in the market," said Floodlines Research founder Anna Wu, according to Reuters.reuters.com

Earnings next test

Former FDIC chair Sheila Bair said Nvidia is not "too big to fail in a bank sense." She still warned that "Nvidia going down would be a pretty seismic event," CNBC reported. Nvidia reports earnings on Tuesday, November 17. That report will show whether Kress stands behind the company's guidance and commitments, Yahoo Finance noted. SoFi strategist Liz Thomas summed up the question: "Can the market survive without positive results from Nvidia?"cnbc.com+1