LMAT

Nvidia Corp (NASDAQ:NVDA) has spent years building an AI empire around Jensen Huang. But the controversy surrounding its longtime CEO is exposing an uncomfortable vulnerability: The company has no clear successor ready to take over if Huang steps aside.

For investors, that could turn a leadership question into a much bigger corporate governance risk.

Nvidia’s Leadership Bench Has a Jensen Huang-Sized Gap

Huang is not just Nvidia’s public face. The CEO has a hand in nearly every aspect of the company’s operations, with an unusually large number of direct reports and influence extending across its day-to-day decisions, The Information columnist Martin Peers wrote, citing the publication’s earlier reporting.

That concentration of authority makes succession particularly complicated. Unlike companies with clearly defined leadership hierarchies, Nvidia does not appear to have an obvious No. 2 who could seamlessly assume Huang’s responsibilities.

CFO Colette Kress could potentially serve as an interim replacement, but The Information doesn’t see Kress as a permanent successor.

The publication has floated two more unconventional possibilities: Advanced Micro Devices, Inc. (NASDAQ:AMD) CEO Lisa Su and Arm Holdings plc (NASDAQ:ARM) CEO Rene Haas.

Su would be an extraordinary choice. The AMD CEO has transformed the company into Nvidia’s most credible AI chip challenger, making the prospect of Su running AMD’s biggest rival an unusual corporate scenario. The two CEOs are also distant relatives, adding another layer of complexity.

Haas may be a more practical candidate. The Arm CEO previously spent seven years at Nvidia, which would give Haas familiarity with the business.

Huang’s Controversy Comes at a Particularly Difficult Time

The succession question is emerging as Nvidia faces scrutiny surrounding allegations involving Huang and an alleged Chinese spy. The Information says the matter has drawn investigations involving Nvidia’s board, Congress and the FBI.

The allegations should not be confused with established wrongdoing. In a Nov. 8 email to employees, Huang wrote of being "committed to protecting Nvidia."

But even if the board ultimately clears Huang, the controversy could leave questions about the CEO’s reputation and leadership hanging over the company.

That matters because Nvidia is entering a period when its competitive advantages cannot simply be taken for granted. Alphabet Inc.‘s (NASDAQ:GOOGL) Google is expanding its custom AI chip lineup, while AMD is becoming a more formidable challenger. Both developments increase the importance of maintaining management focus as Nvidia defends its position in the AI infrastructure market.

Nvidia Investors Have Another Risk to Consider

The Information argues that Huang may eventually conclude that stepping aside would serve both the CEO’s interests as a major shareholder and those of Nvidia’s investors.

That remains speculation, not an indication that the board has decided to replace Huang. But the underlying issue deserves attention regardless of whether Huang leaves. Nvidia’s extraordinary dependence on one executive creates a succession risk that cannot be resolved overnight.

For investors, the next important signal may not come from another chip launch or earnings forecast, but from whether Nvidia can demonstrate that its leadership bench is strong enough to protect the business beyond the Jensen Huang era.

NVDA Price Action: Nvidia shares were down 6.30% at $167.42 at the time of publication Tuesday, according to Benzinga Pro data.

Photo: USA TODAY Network via Reuters Connect