Until a week ago, the question 'what happens to Nvidia without Jensen Huang' was a theoretical exercise. Huang founded the company in 1993, has led it for more than thirty years and made it the world's most valuable public company. This week, as a Republican senator called on him to resign and a House committee chair threatened to subpoena him, the question became one investors price every trading day.
Economists call it 'key person risk': a situation in which a company's value depends unusually heavily on one person. At Nvidia the risk is extreme. Huang is not just the CEO, he is the company's face to customers such as Microsoft and Google, to governments and especially to the White House. He also made the big strategic bets, from investing in parallel-computing software twenty years ago to acquiring Israel's Mellanox, which became the basis of the company's networking business.
And the problem is there is no known successor. Unlike companies where the transition from founder to the next CEO was planned for years, at Nvidia it is unclear who could replace Huang. The company has a strong senior management team, but none of its members has built a public standing close to his. For investors, that means even an orderly departure involves great uncertainty.
On the other hand, it is worth not exaggerating. Nvidia's business does not rest on the CEO's keynotes, but on products with no real substitute in the market today, on a software ecosystem developers around the world depend on and on orders signed years ahead. Large companies have survived founders' departures in difficult circumstances too. The real risk is not that Nvidia collapses without Huang, but that it loses the advantage of a fast decision-maker in a market where every quarter counts.
And Israel? Nvidia's development center in Israel, built around Mellanox, is one of the company's largest and has received major investment in expansion under Huang. A new CEO would not necessarily change that, but would not be as committed to it either. For thousands of employees in Israel, the question of who will lead Nvidia a year from now is much less theoretical than it looks.
