The Daily - What Jensen Huang’s Potential Ouster Could Mean for A.I.

0:01From New York Times, I'm Michael Babaro. This is The Daily. New reporting from The Times has put the future of Jensen Huang, the CEO of NVIDIA, and the man at the center of the AI revolution in growing doubt. Today, my colleague, Tripp Mikkel, walks us through the latest revelations about Huang's conduct, the difficult decision now facing NVIDIA's board, and what Huang's ouster could mean.

0:37for the future of artificial intelligence. It's Thursday, November 12th. We did not expect to have you back on the show this soon. This has moved much faster than anybody expected it to. Yeah. And I'm surprised to be back as well. Well, it's moved fast in part because of you and the reporting you and our colleagues are doing. And at this moment at 12 30 a.m. Eastern time, NVIDIA's directors are finishing up what may be one of the most closely watched emergency board meetings in corporate history, and they are sorting out the fate of the company's CEO, Jensen Wong, a future that now appears to be in grave, grave danger. And I know that things might change by the time our episode publishes at 6 a.m. Eastern time, but at this particular moment, what do we know about where the board's deliberations are?

1:45We know that 10 people who are serving on this Nvidia board that have been there a long time are Wrestling what the decision they never thought they would have to make and that's whether or not Jensen Wong should not only Continue to lead the company which our reporting suggests will not happen But should even have a role at the company going forward. This is the company he co-founded in a Denny's in 1993 So it's a it's really an unimaginable moment for this group of 10 people and from what you're saying They are leaning towards an outcome in which he is no longer chief executive officer of the company He founded this company not an overstatement to say is at the heart of the AI boom the heart of the AI revolution the heart of the global economy

2:36Yes, they are leaning towards an outcome that would take the man who has very much become the face of AI around the world, who's perceived to be the maestro of artificial intelligence, and removing him from leadership of the most important company in the AI movement. Okay, well, tell us how this seemingly unimaginable outcome, just a few days ago when you were on the show talking to my co-host Natalie Kittoreff, you said, that Jensen Wong's future is seen relatively safe. How do we get to this point where it's now in such serious doubt? In recent days and really more than a week, we've been tracking a tip that Jensen Wong had had a relationship with an executive at the company, one of his direct reports.

3:29Hmm. That would basically be a second romantic relationship with somebody, in this case, a colleague. In this case, it would be a second breach of the company's code of conduct to come to light in a matter of days. The first being a breach of the code of conduct for having an intimate relationship with a supplier, the woman who we've written about extensively, Alice Wong at mega speed.

3:56who US intelligence has determined is a Chinese spy. Right. This would be a totally different thing. And on Wednesday morning, my colleagues, Ryan Mack and Georgia, and I decided that we had enough reporting to move forward with a story about the second intimate relationship. Okay. And tell us about who this woman is, who Jensen Wong had according to your reporting, this intimate relationship with the second woman.

4:25The second woman is an executive on his leadership team. Her name is Kimberly Powell. She leads their medical and healthcare group Kimberly's been with the company since 2008. She is often traveling with Jensen and his entourage at conferences and events and things like that and According to our reporting at their recent annual conference in San Jose the two of them were in an affectionate moment that someone caught on camera with their phone and that NVIDIA security came over and got the person to sign an NDA over that moment of affection. So the company security team would have understood that somebody noticed Jensen Wong and this female executive in some sort of moment that felt

5:19Perhaps not quite right and asked someone to sign a document saying that they would never share that information with anybody else That's right. That's right. And this executive presumably since Jensen Wong is the CEO somehow reports to him. What exactly is their relationship? She's one of 60 direct reports at the company who report directly to Jensen Wong and as we all know and in the world of HR one of the kind of cardinal sins in the HR world is you don't have a relationship, a close relationship with somebody who directly reports to you. Right. In fact, most companies expressly forbid this kind of relationship because of the power dynamic at play with a boss being obviously capable of, in theory, coercing a subordinate into a romantic relationship. Do we know if NVIDIA has that kind of expressly forbidden policy? We know that their code of conduct says that

6:14employees at NVIDIA are supposed to, quote, avoid situations where our actions create conflict, including, quote, personal relationships. And the company states that it promptly investigates any reports of that kind of misconduct. Hmm. OK. So did this relationship make its way to NVIDIA's leadership before you found out about it? Not that we're aware of.

6:41Okay, so once the company learns presumably through your reporting about this relationship, what do you understand to have occurred? What I understand played out after that is that after the company got our inquiry and knew that we were moving forward with a story that the board was notified and Fast forward they're having a meeting by the end of the day to discuss and deliberate over whether or not Jensen Wong should continue to lead the company. Help me understand why this requires so much deliberation. I have been a business reporter and in that time I watched CEO after CEO after CEO from McDonald's to BP be pretty much summarily fired for this very kind of relationship with a subordinate. Yeah, why does it cause this much deliberation? I mean this company

7:40is Jensen Wong, right? I mean, it is built around his leadership, his vision, and the structure of the company makes it such that there's not a clear successor at all either, right? When you have 60 people reporting to you, yes, you can pull somebody from those ranks and they could lead the company in his absence. But this isn't something like Take for example, I used to cover Apple for a lot of years like Apple when Steve Jobs was about to die He had you know something on the order of like six very trusted lieutenants that were in position to take over that company I mean it was clear that if it wasn't Tim Cook it could have been Scott Forstall if it wasn't Scott Forstall it could have been

8:25Bill Shiller. I mean, there were just a number of people at the company that had the wherewithal to leave that company forward. And that's just not something that's known about NVIDIA, because what's known about NVIDIA is Jensen Wong is the visionary. Jensen Wong sets the pace for the company. Jensen Wong drives its innovation. And Jensen Wong is its biggest and arguably the best salesman in all of technology. He's the one who's helped persuade the world that these chips are not only so valuable, but help make these chips into something that enjoys a 90% market share in the AI chip world. You're saying to the degree that the board has gotten to the point where it may be ready and perhaps already is ready to push him aside and knock him off as CEO, it has been probably pained and reluctant and agonizing as it gets there.

9:21It has to come to terms with a possibility that no one on this board ever thought would be a reality. I mean, this is a monumental decision for this board. And he's been on a rocket ride the past three years. He could literally do no wrong until all of a sudden all this problematic behavior spilled out into public view. Right.

9:45And what may be fascinating, if in fact, Jensen Wong is out to the CEO, is that after digesting the fact that he had had a romantic relationship with a, according to US officials, Chinese spy who funneled information back to the Chinese government, it may end up being this other second relationship with an employee, not a spy, that may end up costing him his job. Yes. And I think part of the problem here is the board is dealing with a one-two punch that must make them wonder. If this is not necessarily the end of the story. Yeah. Yeah. Which is a troubling thing to ponder. They're making the most complicated and most important technology of our time that is not just important to them and not just important to the economy and not just important to open AI down the street to my right and anthropic down the street to my left.

10:44But also important to the US government and the potential and prosperity of the US economy. These are the rails on which artificial intelligence run and it's what has allowed the US to take a sizable lead and enjoy a lead and sustain that lead over China and the development of artificial intelligence. And that's why for the board, this is such a difficult decision to move forward on. We'll be right back.

11:27Tripp, let's envision a world in which Jensen Wong is no longer the CEO of NVIDIA. Just walk us through the scenarios in which that happens. Does he somehow remain at the company? It sounds like the board would like to find a way perhaps for that to happen. There isn't a huge succession plan written anywhere. Maybe he gets to stick around and help develop that.

11:54Or is it more likely he needs to be completely untethered from this company? We are in such uncharted waters that this is an impossible question to answer and I am so glad I'm not one of those 10 people. I mean, let's just do analysis here, right? And just what we know about this circumstance. If he stays and they conceivably do a search to find a new chief executive to lead the company long-term and they install an interim, to help the company navigate the next several months while that search plays out. If he's still there, who is everybody at the company going to look up to? Who do they turn to to make decisions? It would be him, not the interim CEO. Right. So it could undermine the standing of the interim CEO. It could create challenges for any incoming CEO and for the search process. Well, what's Jensen going to be doing? Is he still going to be there if I take this job or not?

12:52And then there's also the question of like trust, right? The reason that this has become an issue of trust is that when we did our first report about US surveillance, discovering that Jensen had a close relationship with this woman who was a Chinese citizen and the executive at the Singaporean data center firm, Jensen went to Bloomberg News and told them on the record that it was just a normal business relationship. That has turned out not to be true, yeah. That proved not to be true. I mean, he sent an email to the entire company telling him that he'd had an affair and been unpayable to his wife. That was in the span of, I don't know, less than two weeks. That would seem to be the case for a clean break perhaps. Yeah, it would. And we haven't even talked about the implications for Washington. And

13:47invidious position on selling chips to China and the US government policy on that, which has been moved in the direction that Jensen Wong wanted, which was permitting and allowing the sale of some chips to China. You and I know we've talked about this many times in the past couple of years. He has a contrarian view of what the US government's strategies should be relative to what many people in Congress believe and what a large faction of the Trump administration believes. Many people think that we should deprive China of that technology so that the US can keep a lead in artificial intelligence. Jensen believes that those ships should be sold to China so that the US ship companies, namely NVIDIA, can stay ahead of the Chinese companies by making money in China and competing against Chinese companies.

14:41Right. And his view has prevailed. He's persuasively argued to the Trump administration that those chips should be sold to China. I'm guessing where you're headed here, Tripp, is that if Jensen Huang has suddenly gone entirely from Nvidia, the most powerful persuasive proponent of that case for selling chips to China might not be making that case anymore. Perhaps that policy changes. Exactly. Well, this makes me want to ask about President Trump. We've talked a lot about Jensen Huang's very close relationship with the president.

15:08And I wonder how that closeness might influence what comes next. It doesn't seem entirely outside the realm of possibility that President Trump might want to put his finger on the scale of this board's deliberations as it figures out what to do with Jensen Wong. Given Nvidia's importance to the economy, given President Trump's personal relationship with Jensen Wong.

15:29You can almost rest assured that there is a truth social post in our future with the president weighing in on the outcome of this board's decision You know one of the questions we found ourselves asking is Is there a world in which or a mechanism through which the US government could take an interest in NVIDIA? We've seen it do that with another chip company as well a financial stake in a financial stake We saw that a year ago with Intel the US government now ends 10% of Intel Now, I was able to do that because it had already made a commitment to pay until about $10 billion for building out manufacturing plants in the US. And it just kind of pushed that money forward earlier than it would have otherwise. We don't know what the mechanism would be here, but we know this is an administration that likes to have skin in the game and is willing to be active in taking stakes in companies. Just so I understand them. Let's not understand.

16:27For President Trump, who so very much likes Jensen Wong and presumably wants him to stay on as CEO, what would a US government financial stake in Nvidia do to advance that? Or would it have nothing to do with whether Jensen Wong stays on? It would just be to try to make sure the company remains healthy even without him. It would be a sign to the market that this company has the full faith and backing of the US government. You know, I don't want to get into like Wall Street jargon here too much.

16:57But when there's a growing sense that Jensen may not be leading this company going forward, one of the leading semiconductor analysts on Wall Street cut what is called a price target, where he thinks the stock could go based on its performance from $400 to $200, which is only $27 above where Nvidia is trading at the moment. I mean, this was a company that was on the cusp of being a $6 trillion company a few months ago.

17:24and is now valued at $4 trillion. So if the US government came in, it at least tells investors around the world, investors in the United States that this company is valuable and we're standing behind it and we'll make sure that it weathers the choppy waters here and gets back on its feet. What are the next steps for a video's board? And when do you expect to know for sure what Jensen Wong's fate is going to be?

17:51The next step for the board is to make this immediate decision in terms of how it's going to set up the structure going forward in terms of the leadership structure. It also has to fulfill its promise to investigate. And it needs to proceed with that investigation. They hired a lawyer earlier this week from Wachtell Lipton to do the investigation. He's an experienced investigator, so that will need to proceed.

18:17And they'll presumably need to run an executive search process and select a new CEO for a chip company, which is not an easy thing to do. I mean, you have to find somebody who's technically knowledgeable and also experienced leading a large enterprise. And there are not that many people like that out there in the world. Right. You're saying it's not at all clear who would take Jensen Wong's place long term. It doesn't sound like the board necessarily has much of a list. No.

18:46No, I mean, I think they'd be starting from scratch. If Johnson Wong is completely forced out of his company, is there any real risk that it impacts the future of AI, that him not being there slows this company's production of these chips and therefore slows the pace of U.S. supremacy in AI?

19:08The companies that do business with Nvidia who I talked to about this dilemma like what happens if Jensen's not there say that the leadership ranks at Nvidia are solid and strong and that there can be continuity at this company that it can continue to Crank out the kind of chips and technology that we're accustomed to seeing from it with or without Jensen But it is going to take somebody to come in and look at the leadership structure and reorganize it in a way that can work with a different CEO. Because this was really a structure and an organization that was developed by one man for his own purposes. And it worked with him as the conductor of the orchestra. But there's no other company in the country that's structured this way. Well, that brings me to my final question. One thing in this whole saga feels quite certain, which is that Nvidia's board did not plan for this day.

20:07and did not push Jensen Wong to plan for this day where he might be in serious trouble and this judgment will be called into question and that they might need to get rid of him. And that is the job of a board of directors to come up with that kind of succession plan. And so are we learning that Nvidia for all its success and its extraordinary influence in place in the global economy wasn't quite ready to be the company that it has become in our global economy?

20:36Yes. And making matters worse, you know, in addition to not having the internal structure to get through some of this easily is the fact that the company has put themselves at the epicenter of the entire AI boom. I mean, they have been investing in startups. They have been funding data center buildouts. They have been backstopping financiers who are helping build data centers. They have been putting their foot on the gas and making this entire thing go. And now the guy who was the main guy putting his foot down maybe pulled out of the equation. And that begs the question if overall this time and we've been thinking about

21:20you know what could make the AI bubble burst and we've asked about you know startups that don't fulfill on their their potential we've asked about AI agents going rogue AI agents going rogue data centers not being built because of moratoriums and policy what if it actually all comes down to one executive's poor judgment well trip get some sleep and we'll talk to you soon appreciate it thanks so much by thursday morning shares of nvidia fell by around 8% in what's known as after hours trading, as investors absorb the possibility that Jensen Huang might be ousted as the company's CEO. We'll be right back. Here's what else you need to know today. God didn't want us to get it the easy way. He wanted us to get it the Mississippi way. On Wednesday night, after more than a week of vote counting,

22:46Democrat Scott Cologne was declared the winner of the U.S. Senate seat in Mississippi, making him the first black senator from the state in nearly 150 years, and the state's first Democratic senator in decades. His narrow victory over incumbent Republican Cindy Hyde Smith highlights just how much success Democrats had this year in heavily Republican states, including Texas, Iowa, and Kansas.

23:15Democrats now have a 55-seat majority in the U.S. Senate. It's not something that I did, y'all. It's something that we did. I did was have the courage to imagine a night like this. I had the courage to believe in Mississippi. I had the courage to understand that we could show the country that Mississippi matters.

23:58was produced by Diana Nguyen and Eric Krupke. It was edited by Mark George, contains music by Dan Powell and Marion Lazano, and was engineered by Alyssa Moxley. Our theme music is by Wonderly. Special thanks to Erin Griffith. That's it for the Daily. I'm Michael Bobar. See you tomorrow.