Abstract:
Nvidia on Thursday named longtime chief financial officer Colette Kress as interim chief executive. The veteran financial executive will have to lead the company through the turmoil and uncertainty caused by the sudden resignation of former CEO Jensen Huang.
Kress, 59, joined Nvidia in 2013; at the time, the company was just a general supplier of chips for gamers. Although she was instrumental in propelling Nvidia to the center of the artificial intelligence economy, she was not the one making major decisions at the company, according to people familiar with the matter.
Huang Renxun has always had complete control of Nvidia, but has never formulated a clear succession plan. A person familiar with Kress revealed that whenever the two disagreed, Huang would often use "strong tactics" to suppress the other party.
However, Kress is well known in the investment community. Besides Huang, she is the only other person who regularly speaks on Nvidia's quarterly earnings calls. The next such meeting is scheduled for next Tuesday.
Kress’s strategy may be more prudent than Huang’s. As chief financial officer, Kress sometimes objected to deals pushed by Jen-Hsun Huang, including a $250 billion credit plan from Nvidia that would have allowed OpenAI to fill a total of 8 gigawatts of data center space using Nvidia's latest generation chips, according to people familiar with the matter. In August of this year, Nvidia finally split the deal into two parts and has currently only committed to provide approximately US$100 billion in credit support for the first part.
Delays in data center projects and cancellations of cloud computing-related deals in recent months have complicated the situation behind the AI boom, according to people familiar with the matter. Against this background, Kress has focused on how to ensure that Nvidia's financial risks are not excessively concentrated in a few companies. Prior to joining Nvidia, Kress served as chief financial officer of a division of Cisco for three years and worked at Microsoft for more than a decade.
On Wednesday night local time, Huang Renxun resigned from the company he had led since its founding in 1993. His departure was swift — within days of Nvidia’s board announcing an investigation into him. News emerged Wednesday afternoon that he also had an extramarital relationship with a direct report to him, Kimberly Powell, vice president of Nvidia's healthcare business. According to several former Nvidia employees, the relationship between Powell and Huang was widely discussed among employees.
Nvidia’s board of directors said Thursday morning that it will begin the search for Huang’s long-term successor and will consider both internal and external candidates. Current and former employees of the company, as well as other industry executives, have speculated that Nvidia's Ian Buck may take over the role. Buck, who is about 50 years old, currently serves as vice president of Nvidia's high-performance computing business and is one of the key developers of CUDA, a software suite for programming Nvidia chips; he joined Nvidia in 2004.
On Thursday, investors reacted negatively to the news of Huang's departure, causing the stock price to drop nearly 7%. Nvidia's stock price has been hit hard by the scandal surrounding the company recently, falling more than 25% in the past two weeks.
“I have no doubts about this company and its future,” Kress wrote in a message to Nvidia employees on Thursday morning local time. “We play a vital role in building the technology that drives the artificial intelligence (AI) revolution, and we have important work to do in the future.” She said she would host a company meeting next Wednesday, the day after Nvidia releases its quarterly financial report.
In the same statement, Nvidia founding board member Harvey Jones - who will now serve as the company's first-ever chairman - described Kress as "a key architect of Nvidia's growth and capital strategy." He also thanked Jen-Hsun Huang for his "profound" contributions to the company.
NVIDIA has invested more than $100 billion in capital, credit guarantees and other forms of financial support to its customers and supply chain partners. Nvidia plays a unique dual role in the artificial intelligence revolution: It is both a key supplier of the hardware needed to develop the technology and a major financial backer for its customers. Under Jensen Huang, Nvidia seems unaffected by recent concerns about the state of the artificial intelligence industry. Nvidia has recently increased its investment in artificial intelligence startup Anthropic to $10 billion, according to people familiar with the matter.
In the past few days, some investors and founders in the artificial intelligence field have expressed concern that it may be harder to obtain new investment or other financial support from Nvidia in the future.
An executive at a cloud service provider that purchases Nvidia chips said the uncertainty surrounding Huang is prompting the company to consider using chips from other vendors, such as Google or AMD. The company had previously considered this move to diversify its hardware supply and get rid of its over-reliance on Nvidia, but was concerned that the move would offend Jen-Hsun Huang. Now, the executive said that given Huang's critical role at Nvidia, they are concerned that his absence could have a negative impact on future generations of Nvidia's chips.
“We’d be fools not to consider other options,” the executive said.
For Kress and his future successors, how to prevent large customers from further switching to AI server products from other chip manufacturers will be one of the key challenges they face. However, many customers said they expect Nvidia's chips to continue to be in short supply - at least in the short term; in addition, this management change will not change the market's general perception that Nvidia's AI server chips are "the best in the industry."
According to two people familiar with the matter, during his tenure at Nvidia, Kress not only sometimes disagreed with Huang, but also clashed with Huang's daughter Minshan Huang and her son-in-law Nico Caprez - both of whom were previously regarded as rising stars within the company. With Huang stepping down and Kress taking over as interim CEO, the couple's influence within the company may diminish.
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