Nvidia Has No Ready Successor to Jensen Huang, Analysts Warn

Nvidia's board is investigating the implications of CEO Jensen Huang's relationship with a woman who reportedly worked as a foreign-intelligence asset for China — and the company has no obvious heir. The board says it has confidence in Huang, who stays in the top job. But some analysts see a very real possibility that Huang will have to exit as a result of the investigation and the heightened attention around it. Nvidia did not immediately respond to a request for comment from MarketWatch.

Wall Street calls this "key-man risk." The term describes companies led by well-known figures who have become emblematic of the business and seemingly irreplaceable. The fear: without the central figure, the company loses the essence of its success.

Why is Huang harder to replace than other founders?

Richard Windsor, an independent analyst with Radio Free Mobile, puts the problem plainly.

"The single-man risk affects many companies with a high-profile founder or CEO, such as Apple with Steve Jobs, Meta with Mark Zuckerberg and many others," Windsor said.

For Nvidia, though, "this problem is particularly acute because Jensen Huang is very hands-on, meaning that the key decisions that led to its success were ultimately taken by him, and because there is no obvious successor," Windsor said.

D.A. Davidson analyst Gil Luria told MarketWatch that given Huang's "outsize role and unclear succession, this is the risk investors are likely to focus on."

Huang has led Nvidia for more than 30 years. He has said the "secret" to that tenure is "don't get fired" and "don't get bored," according to Bloomberg. With his signature leather jackets and his talk of a "new industrial revolution," he owns the spotlight. No other Nvidia executive is well-known to investors except Chief Financial Officer Colette Kress, a 13-year company veteran who speaks on earnings calls and at conferences.

Could Colette Kress step in?

The jump from CFO to CEO is not easy. Many boards prefer leaders with operational experience or design vision. The cautionary tale: former Intel CFO Bob Swan, derided as a bean counter, lasted just two years as CEO after taking over from Brian Krzanich in 2019.

Jason Schloetzer, an associate professor of accounting and management strategy at Georgetown University's McDonough School of Business, said Kress could serve as interim CEO if Huang leaves. That would buy the board time. In terms of the CEO position, that job "is really just a match for what the firm needs," he said.

If Nvidia needs a leader with deep technical knowledge and design vision, it would need "a large bench who can fill in any potential gap that a CFO may have in their knowledge base," Schloetzer said.

What does the 60-report structure mean for succession?

The real risk, in Schloetzer's view, lies in Huang's leadership structure: 60 direct reports.

"Succession seems to work better when there's more of a pass-the-baton relay, where someone has been telegraphed as being the heir apparent, and that person is visible for a lengthy period of time," he said.

At Nvidia, the work has likely been divided among 60 people. If the successor is chosen from within that group, the others will likely question why it wasn't them. In that case, Schloetzer said, competitors such as Advanced Micro Devices, major cloud providers building custom chips, and other chip makers will look to recruit from that pool.

"That is the risk in this situation, is there could be an exodus of talent after the board makes the decision of who they're going to elevate," Schloetzer said.

Should the board itself face scrutiny?

If Nvidia's board picks an outsider, that person will likely restructure top management along the lines of a typical organization, Schloetzer believes. But Huang "is someone who's very difficult to replace," he said, and the board has allowed Nvidia to structure itself in a way that "facilitates key-man risk."

Given the size and value Nvidia has reached, "there certainly should be some scrutiny of the board, of why they let this happen," he said.

The board's investigation into Huang's relationship, then, is not only a test of one CEO. It is a stress test of an organizational design that concentrated 30 years of decision-making in a single person, with no named heir visible to investors.