Nvidia shares fell more than 6% in premarket trading on Thursday as investors weighed whether the company's board would remove CEO Jensen Huang. CNBC confirmed that the board met on Wednesday to discuss whether to oust him.
The pressure follows reports of extramarital relationships. The Financial Times reported that Huang was romantically involved with Alice Huang, an executive at cloud company Megaspeed, whom U.S. intelligence officials believe is a spy for China. The source says Huang admitted to an affair on Sunday. The New York Times reported on Wednesday that Huang had another relationship, with Kimberly Powell, Nvidia's vice president of health care, who reports to him.
Several Wall Street analysts told CNBC that Nvidia's stock could fall 20% if Huang is removed. Bernstein cut its price target on the stock from $400 to $200. Bernstein analyst Stacy Rasgon said the alleged affair with a direct report makes it "much tougher for the board to leave him in position." He also said it is unclear who could succeed Huang.
U.S. lawmakers have called for Huang's resignation. Richard Reyle, chief investment officer at Questar Capital Partners, said Nvidia's lack of a succession plan makes the stock "uninvestable."
Nvidia's stock is down more than 20% over the last month. Rivals AMD and Broadcom rose 3.9% and 3%, respectively, in premarket trading.