Why China Could Be the Biggest Winner in Jensen Huang’s Downfall

A sharp market reaction

The Wall Street Journal reported that Nvidia’s board was preparing to remove Huang. Following that report, the company’s shares dropped about 8% in after-hours trading, wiping more than $300 billion from its market value.

The article presents that loss as a measure of Huang’s value to Nvidia. It compares the amount with the value of Morgan Stanley and Goldman Sachs, described as two of the world’s most important investment banks.

China’s potential advantage

The United States leads in the newest powerful technology since the internet emerged 30 years ago, with China in second place. Analysts cited in the article said Huang’s removal could weaken the US position as China invests in its own AI capabilities.

Brad Gastwirth, global head of research at Circular Technology, called a possible removal a setback for the United States. Stacy Rasgon, in a note to investors, wrote that China would clearly be the primary beneficiary and said he hoped cooler heads would prevail.

Board faces competing risks

Nvidia’s board has questions to address about Huang’s conduct, including his relationship with a person described as a possible Chinese spy. The article says directors could face legal risk as shareholder representatives if they take no action.

At the same time, the board must consider the cost of losing the executive who built Nvidia into an engine of the AI boom. Gastwirth said the allegations, especially those involving national security, should be taken seriously, but removing Huang without findings that make his position untenable would be a major strategic mistake.

Analyst cuts price target

Rasgon said in a note that he could not speculate on who might replace Huang. He also lowered Nvidia’s price target to $200 from $400. The article does not report that Huang has been removed. Instead, it describes a reported board plan alongside allegations and the difficult decision directors would face.