Nvidia’s Board Just Opened an Investigation Into Jensen Huang. Here’s What History Says Comes Next for the Stock

History says the board’s verdict matters more than the first day: in three cases where a board reviewed a chief executive’s personal conduct and the executive left, the shares fell the next trading day every time, by 2.4% to 10.1%, and sat below their starting price six months later; the one time a board looked at its founder and kept him, the stock rose 4.9% that day. Nvidia’s board said Sunday at 2:59 PM ET that it is opening an independent investigation into reports that Jensen Huang was the target of a foreign intelligence effort. The same statement says the board has confidence in Huang and that he is cooperating.

An independent investigation of the founder who runs a company reads as a warning about key-person risk, the one risk Nvidia’s rise never asked you to price; the limit is that the board says it has confidence in Huang, he is cooperating, and the precedent where the board kept its founder is the one where the stock went up.

What the board and Huang said

The board’s statement, released through GlobeNewswire, says it “is initiating an independent investigation in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort.” A committee of independent directors with outside counsel will oversee it. The board “has no reason to believe that either national security or NVIDIA secrets were compromised,” that “Jensen fully supports the review and has committed to cooperating with it,” and that it “has confidence in Jensen and his leadership team.” It sets no date.

In a letter to employees obtained by Axios and published in full by Bloomberg, Huang wrote: “I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did.” He wrote that he takes full responsibility and will cooperate fully. Bloomberg and Axios reported that the relationship was with a woman U.S. intelligence officials suspected of working for a Chinese spy agency. Nothing in the record says what the committee will find.

Three boards, three reviews, three stocks

Intel, June 2018. Intel said before the open on June 21, 2018 that Brian Krzanich had resigned after an investigation by internal and external counsel confirmed a past consensual relationship with an employee violated its non-fraternization policy. From the prior close of $53.46, Intel fell 2.4% on day 1, 8.8% after a week, 2.9% after a month and 14.8% after six months. The S&P 500, measured by the SPY fund, did -0.6%, -2.4%, +1.3% and -10.4% over the same windows, so Intel trailed it by 4.4 points at six months.

McDonald’s, November 2019. The board voted on Friday, Nov. 1, 2019 and said on Sunday, Nov. 3 that Steve Easterbrook had been separated from the company over a consensual relationship with an employee that violated policy. From $193.94, the stock fell 2.7% on day 1, 0.2% after a week, rose 0.3% after a month and was down 5.8% after six months. The index did +0.4%, +0.9%, +2.7% and -7.6%; the six-month window ran into the 2020 crash, and McDonald’s beat the index by 1.8 points.

Wynn Resorts, January 2018. The Wall Street Journal published misconduct allegations against Steve Wynn on Friday, Jan. 26, 2018, and the board formed a special committee of independent directors the same day. He denied the allegations and resigned on Feb. 6. From $200.60, the stock fell 10.1% on day 1, 15.0% after a week, 16.7% after a month and 17.3% after six months, while the index did +1.2%, -0.6%, -3.0% and +0.3%. Wynn trailed the index by 17.6 points.

Average day 1 across the three: a 5.1% drop. All three were below their starting price six months later, and two trailed the index.

The one time the board looked and kept its founder

The closest case of a board standing by a founder after an independent review is Apple in 2006, on a different subject: stock option accounting. On Dec. 29, 2006 Apple filed its delayed 10-K with the special committee’s finding that Steve Jobs “was aware or recommended the selection of some favorable grant dates” but did not benefit from them, and Al Gore and Jerome York said the board “has complete confidence in Steve Jobs and the senior management team.” From $80.87, Apple rose 4.9% that day, 5.9% after a week, 5.6% after a month and 49.1% after six months, against +5.7% for the index.

It is one case, and Apple’s committee had finished its work when the board spoke. Nvidia’s has just begun.

What that means for 1,000 Nvidia shares

Say you are 58, retired from a software job at 55, and bought 1,000 Nvidia (NASDAQ: NVDA) shares in a taxable account at the April 4, 2025 close of $94.31. Your cost was $94,310. At Friday’s close of $186.64 the position is worth $186,640, a gain of $92,330, or 98%. Nvidia is 6.0% of your $3,100,000 ($1,800,000 in a 401(k) and IRA, $1,100,000 in taxable accounts including this position, $200,000 in cash).

Apply the four precedents to those 1,000 shares from Friday’s close. An Intel-size day 1 (-2.4%) takes the position to $182,161, a loss of $4,479, and an Intel-size six months (-14.8%) leaves $159,017. A McDonald’s-size day 1 (-2.7%) means $181,601, down $5,039, and $175,815 after six months. A Wynn-size day 1 (-10.1%) means $167,789, down $18,851, and $154,351 after six months; even that path leaves you $73,479 ahead of what you paid. An Apple-size day 1 (+4.9%) means $195,785, up $9,145, and $278,280 after six months. The average day 1 of the three removed-CEO cases, a 5.1% drop, costs $9,456, less than Thursday’s 9.26% drop in the stock.

If you are tempted to sell everything Monday. Selling all 1,000 shares realizes a $92,330 long-term gain and about $13,850 of federal tax at 15%, leaving $172,790. You would pay that tax to avoid a day the precedents put at $4,479 to $18,851, on 6.0% of what you own.

If you want less of it. Selling 500 shares realizes $46,165 of gain and about $6,925 of tax, raises $93,320 in cash, and keeps 500 shares worth $93,320. That is a decision about concentration, the same decision before Sunday’s statement as after it.

What history does not say

Four cases make a pattern, not a law. Intel’s six months ran into the fourth quarter of 2018 and McDonald’s into the 2020 crash, which is why the index figures are there. Nvidia reports results on Nov. 17, its stock had already fallen 22% from its record before Sunday, and none of the precedents says what Nvidia’s committee will conclude or when.

The bottom line

A board review of a chief executive’s conduct has meant a first-day drop of 2.4% to 10.1% when the executive left, and a 4.9% gain the one time the board kept its founder. On 1,000 Nvidia shares bought at $94.31, the worst of those first days costs $18,851 and still leaves a $73,479 gain. Nvidia’s board has said it has confidence in Huang and set no date. Decide how much of one stock you want at 6.0% of your money, and let that set what you do on Monday.

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