Nvidia chairman voices 'full confidence' in Kress as shares slide

Kress inherits an internal investigation, a prospective congressional probe, and falling shares

In a statement online, Nvidia’s board chairman said the board has “full confidence” in Colette Kress and the leadership team and that it expects the company’s operations, customer commitments and product roadmap to continue without interruption, NPR reported Friday. The chairman’s endorsement arrived as the board named Kress, the company’s chief financial officer, interim chief executive after Jensen Huang resigned, while it searches for a permanent replacement.

The appointment follows allegations that Huang had multiple affairs, including with a woman who may have been recruited by China to spy on him.

Kress is a longtime Nvidia executive. She joined the company 13 years ago after working in finance at technology companies, and has been prominent alongside Huang, appearing on dozens of earnings calls when Nvidia reports quarterly results. NPR tech correspondent John Ruwitch described her as a known quantity inside Nvidia, with its investors and with companies it does business with.

Ruwitch described the challenges Kress faces as immense. Nvidia is a linchpin of the AI economy and, by extension, the U.S. economy because it makes the most widely used chips powering the AI revolution, Ruwitch said, but it just lost a visionary leader who, Ruwitch said, deserves a lot of credit for building the company and making it into the juggernaut that it is — and who was very much the public face of the company. The company holds an 80% to 90% market share in chips called graphics processing units, or GPUs, that AI runs on.

Tammy Madsen, a professor at Santa Clara University’s Leavey School of Business, said a major order of business for Kress is reassuring the world that Nvidia still has its mojo, especially at a time when the share price has been falling because of the crisis.

“I mean, I think for her, it’s important to sort of provide confidence back to the market that - we are going to turn this around, and here’s the steps we’re taking to move forward,” Madsen said.

Nvidia shares have been trending downward and are off more than 10% since last Friday, before the allegations against Huang emerged over the weekend. Going forward, Ruwitch said, Kress has a balancing act — managing some serious short-term challenges and Nvidia’s long-term strategy.

Short-term, there will be fallout from Huang’s downfall, Ruwitch said. There’s an internal investigation into Huang’s affair with the Chinese woman that’ll play out at Nvidia, and Congress is also preparing to probe the spy allegations, which could put the company under a hot spotlight.

Then there are all the relationships with Nvidia’s partners and the deals that Huang handled that are going to have to be tended to. That includes some of the so-called circular-financing agreements where Nvidia invests money in companies that then turn around and buy chips for data centers. Kress, as CFO, will be intimately familiar with those arrangements, which Ruwitch called a plus. On the tech front, Ruwitch said Nvidia is king of the hill on AI chips because it makes really popular gold-standard products, and Kress is going to have to make sure that Nvidia stays on point to protect market share.

“It is a very healthy organization. They’ve been moving forward on a strong strategy. But I think what needs to remain strong is that long-term vision,” Madsen said.

The company’s in a strong market position, and demand for its products is not expected to drop off anytime soon, just because more and more people are using AI, Ruwitch said. One question to watch is how much trust and leeway the board gives Kress as she runs the company, Ruwitch said, adding that the board is “making the right noises.”