Nvidia’s crisis is a perfect storm – mostly of its own making

Nvidia’s crisis is a perfect storm – but much of it is down to governance decisions of its own making. 

This article is being written in late 2026, during a time of continued growth in the tech and AI sectors (there have been bumps, but the trends are overall positive). 

So, how have we ended up in a situation where one of the biggest players in that space has lost almost a fifth of its value in a week, and over a quarter of its value in a month, and effectively erased all of its record-breaking gains since March of this year? 

It’s a perfect storm of crises, and it centres on revelations that founder and long-time CEO Jensen Huang has admitted to an affair with someone alleged to be working as a spy for China. 

Nvidia’s board has since confirmed the launch of an independent investigation into the matter – largely the tip of the iceberg when you consider that the FBI has launched one of their own, and why wouldn’t they? Huang is a core member of the inner club of tech bosses who are in close contact with the US government – the same government that’s hell-bent on ensuring they’re not bested by China in a tech arms race. Now, there are credible suggestions that the fortress has been infiltrated in the most high-profile, soap-opera way possible. 

For Nvidia’s leaders, the dropping share price, the massive investigation, and the lawsuits from shareholders all feed into the narrative that the company has found itself caught in a perfect storm. While that may be true, we shouldn’t be so superficial as to assume that it means it was entirely unavoidable from a governance standpoint. Some of it was, yes, but others are based on entirely conscious governance decisions, anchored on the fact that the company has let a case of “founder governance” drive it towards a multi-billion-dollar wall. 

Let’s unpack:

Jensen Huang co-founded Nvidia in 1993, and he’s remained CEO ever since. Analysts in Silicon Valley have frequently marvelled at such a long tenure in an industry where most leaders move on far quicker. But in corporate governance, it can sometimes be less of a positive than it sounds. 

In fact, without proper management, such a long-term tenure can create risks of its own. 

The challenge of a successor is one thing. Huang will leave eventually, and the company needs to make sure that departure doesn’t cause bumps through rudderlessness. If that departure turns out to be soon, on the back of damning investigations, then the company will face even more risk; hurried CEO departures make it far more likely that the company isn’t prepared for life after they’re gone. 

But far more potent with Nvidia is this simple fact: having a CEO in place for a third of a century means the business’s culture, external relationships and core strategy become hardwired to that one individual. When that doesn’t yield negative results, everything works normally, but when it starts having ramifications, much of the damage control is in the CEO’s hands and out of the company’s.

Companies with celebrity CEOs face a unique challenge: Whether they believe it fair or not, the public and the media will associate the actions and opinions of one with the actions and opinions of the other. 

Elon Musk – another member of Washington’s elite tech club – is a perfect example. His gravitation towards right-wing politicians in the mid-2020s compromised his personal reputation in the eyes of many customers buying his products, particularly Tesla vehicles. Sales slowed in many regions; some Tesla owners even felt the need to attach stickers on their cars, specifying that their purchase came before Musk became so outspoken and controversial. 

Huang has had arguably less international recognition in his many years at Nvidia, but the rise of AI and his close relationship with Donald Trump have definitely seen it grow. 

Ironically, far more people likely know who he is now because of his alleged affair. Ultimately, that kind of negative attention is never easy to handle. We see it time and again when leaders in the public eye do something controversial. Swiping a gifted hat from a child at a sports event, getting caught on a kiss-cam with a secret affair at a concert – suddenly the entire company is involved. Other executives and the board need to urgently divert attention away from strategy and forward-planning, and deal with the fallout. 

Such is the true danger of having a famous leader.

Nvidia’s board is at the centre of this unfolding story. Investigations into Huang’s alleged affair need to come from the directors, who must prove themselves impartial and independent if that investigation is to be taken seriously. 

Incidentally, though, Nvidia’s board has question marks over its independence. 

It’s not a rare phenomenon – especially in companies with CEO tenures as long as Huang’s. In these cases, boards can often show elements of rubber-stamping their leader’s decisions and underusing their powers of questioning. 

Here, it’s no different. Nvidia’s board does have some fresh independent perspective through directors hired in the last 5-6 years. However, some directors have been in place for far longer. Four have held continuous roles since the 1990s, and have had close relationships with Huang during that time.

It’s all a recipe for doubt unless managed extremely well. Nvidia’s ultimate goal with any investigation is to ensure it has utmost credibility. The only thing worse than a corporate scandal is the probe into that scandal bringing the company into further disrepute.

News of Huang’s affair comes in the same week as a dramatic drop-off in tech stocks, prompted by the unexpected scale of Democrats’ victories in the US midterm elections. 

Many Democrats have championed more regulation in tech, more scrutiny of AI, and more opposition to the data centres that keep share prices like Nvidia’s rising higher. Trying to deal with a reputational disaster while cooling investor nervousness around AI’s future is not something any company wants.  

The problem with the phrase “perfect storm” is that it often implies that each misfortune was unavoidable. If you look at the four quagmires above that Nvidia currently faces, only one truly carries that description. 

It’s bad timing that news of an affair with a Chinese spy surfaced at the same time as a market slowdown. The rest, however, is more in the hands of Nvidia’s leadership. 

Huang’s personal decisions are a factor, but so is the company’s willingness to keep him in the role of CEO for as long as it has, alongside a board with alternating levels of independence, and a situation where personal brands affect business outcomes. 

None of those decisions is wrong, but they carry risk. Failing to deal with that risk is bad governance. The onus is now on Nvidia’s board to ensure their decision-making structures result in a quick turnaround, and not make things worse.