Jensen Huang affair puts Nvidia's future at risk, with no clear successor to the renowned CEO

Nvidia CEO Jensen Huang's admission of an affair with a purported Chinese spy has raised questions about his future at the company, and what happens if the 63-year-old co-founder, who built the chipmaker into one of the most valuable businesses on the planet, is forced out.

Shares of Nvidia sank more than 5% on Monday, even as the broader market rallied sharply, after Huang acknowledged the affair in a message to staff on Sunday, and said that the board was launching an investigation into whether he was targeted by a foreign intelligence agency. The board said it has "confidence in Jensen," and that it has "no reason to believe that either national security or Nvidia secrets were compromised."

The New York Times first reported that the Chinese businesswoman was a spy for China's Ministry of State Security, according to people briefed on the intelligence circulated in a memo among the Trump administration in the spring. China has called the allegation a smear.

While Nvidia says Huang will continue to lead the company during the probe, pressure is rapidly mounting on the chipmaker, whose technology has powered the first four years of the generative artificial intelligence boom. Leaders from both parties are calling for briefings, and Democrats poised to take control of both houses of Congress are calling for investigations and new legislation "to stop advanced AI chips from fueling China's military," Sen. Elizabeth Warren of Massachusetts wrote in a post on X on Monday.

Huang has outsized influence over Nvidia, and is the sole face of the company with no clear second-in-command. He's also among the loudest champions of AI in the country, is critical to the financing of the broader infrastructure buildout and has a close relationship with President Donald Trump, giving Nvidia a front-row seat when it comes to discussions on AI policy, safety and regulation.

"The issue at Nvidia is that there is no clear successor to Jensen, and we had expected him to stay in this role for at least 10 more years," analysts at Melius Research said in a Monday research note.

However, relative to some of his founder peers in tech like Meta's Mark Zuckerberg and Elon Musk at SpaceX , Huang has minimal actual control. He owns just over 3% of the outstanding shares and is one of 11 members on a board that has no official chair.

And in the risk factors of Nvidia's financial filings, Huang isn't specifically identified as a key person. Rather, the company says, "we are highly dependent on the services of our longstanding executive team."

"Failure to ensure effective succession planning, transfer of knowledge, and smooth transitions involving executives and key employees could hinder our strategic planning, execution, and long-term success," Nvidia says.

Still, Huang's influence is undeniable, so much so that the question of succession is one that's hardly broached among analysts and investors.

Timm Schulze-Melander, an analyst at Rothschild & Co. Redburn, wrote in a Monday note that Huang could be forced to step back from the CEO role if the board's investigation reveals "something materially more serious" than an undisclosed relationship.