Nvidia Highlights the Leadership Risks Within Big Tech Stocks

The ouster of Jensen Huang from his role as CEO of Nvidia Corp. (NVDA) has brought two risks to the forefront. The first is key person risk—that is, the risk of overreliance on one individual for a business’ operations. The second, and closely related, is the concentrated control that exists in many other large technology companies.

Jensen Huang has been widely reported as having an intimate relationship with Alice Huang, an alleged Chinese spy. (The two are not related.) Yesterday, The New York Times reported that Jensen Huang also had an extramarital relationship with Nvidia’s vice president of healthcare, Kimberly Powell.

Though Jensen Huang’s ownership stake in Nvidia was just 3.58% as of March 2026, he was described as managing all aspects of the company’s business. Nvidia’s board of directors, of which Huang was a member, lacked a chairperson until Harvey Jones was appointed today. (The board of directors did have an independent lead director prior to this appointment, though.) Furthermore, Huang’s managerial structure appears to have lacked a clear succession plan. CFO Colette Kress will serve as interim CEO, while maintaining her CFO role, until a permanent successor has been named.

Huang was a key figure in Nvidia, but from a voting power perspective, the heads of other technology companies are even more insulated. Alphabet Inc. (GOOGL), Meta Platforms, Inc. (META), Snap Inc. (SNAP) and Space Exploration Technologies Corp. (SPCX), commonly known as SpaceX, all have more than one share class. Those special share classes carry extra voting power, resulting in more concentrated control. The table below was constructed by Anthropic’s artificial intelligence (AI) chatbot Claude using data from the most recent proxy statements.

Even in cases where a founder does not have a controlling stake in their company—such as Elon Musk with Telsa Inc. (TSLA)—friendly boards of directors give can them give a lot of power and incentives. Last year, Telsa’s board of directors proposed, and the shareholder vote approved, the largest corporate pay package for a CEO in history.

At such companies, it is difficult for shareholders to push back when a CEO misbehaves. The sheer size of most of these companies also makes it difficult to avoid having exposure to them. Nvidia, Alphabet, Meta Platforms and Tesla are all among the 10 largest stocks in the S&P 500 index. Anyone holding a market-capitalization-weighted large-cap growth or technology ETF or mutual fund is exposed to them—potentially in a meaningful way. Some of you may also have other direct or indirect exposure to such stocks, as I do.

Buy, Hold or Sell Nvidia?

This is the key question many investors likely have right now. Common portfolio rules do not address situations where a CEO was a target of an alleged spy or had an affair with an executive. We do not know what information was compromised because of Jensen Huang’s relationship with Alice Huang or how damaging this incident will be to Nvidia’s future or to U.S. national security.

Fundamentally, Nvidia is an exceptionally strong company. Its 12-month operating margin is 65.2%, its total-liabilities-to-total-assets ratio is 28.5% and it generates a high level of free cash flow. The company’s investments in private companies—which include customers of Nvidia’s semiconductors—accounted for 16% of total assets as of the end of July 2026.

Analysts expect earnings to grow from $9.317 per share in fiscal-year 2027, which ends January 31, to $21.343 per share in fiscal-year 2029. We have yet to see any downward earnings estimate revisions since The New York Times reported late last month that Huang was a target of a Chinese spy plot.

The stock closed yesterday, November 11, 2026, with high price-to-book-value (P/B) and price-sales (P/S) ratios of 18.33 and 13.92, respectively. On a forward-looking basis, Nvidia looks cheaper, with a forward price-earnings (P/E) ratio of 18.6 based on fiscal-year 2027 earnings and 10.9 based on fiscal-year 2028 earnings as of yesterday. The forward price-earnings-to-earnings-growth (PEG) ratio is low at 0.50. Such a ratio allows for a significant margin of error in analysts’ longer-term estimates.

The elephant in the room is, of course, the scandal. Based on what we know right now, there isn’t a good answer on what to do beyond wait and see. Part of the new interim CEO’s job will be conveying confidence to analysts and investors during next Tuesday’s earnings conference call.

I suggest looking at your overall exposure to Nvidia—through both any direct stock ownership and via ETFs, mutual funds, managed portfolios, etc. While a single stock can significantly increase your wealth, it can also quickly diminish it too.

A simple exercise is to calculate the maximum damage a single stock could do to your portfolio. Say a single stock has a 20% weight and that stock falls 50% in value. The drop would cause one-tenth of your portfolio’s value to vanish in a potentially short period. (Nvidia’s share price has fallen 30% in just a month’s time.)

A rule used in the AAII Dividend Investing and VMQ Stocks portfolios is to trim positions of stocks whose weights in the portfolio have grown to 2.0 or 2.5 times the size of the average holding. (The average holding size is the total portfolio value divided by the number of stocks held.) Neither number is magical, but they both set limits to prevent any single position from becoming disproportionately large.

Being properly diversified across several stocks reduces the risk of a single stock or company blowing a hole in your portfolio because of CEO malfeasance or other problems.