By Sophie Lindqvist

Nvidia shares have fallen 10 per cent this week — and 20 per cent over the past month — after the ousting of co-founder Jensen Huang, in a single day erasing more value than HSBC's entire market capitalisation. That is what happens when one individual's poor judgement can move the world's second-largest company. The trigger for Huang's defenestration was a personal scandal; the damage was structural.

Huang had served as both chief executive and president of the semiconductor giant for more than 30 years, steering it from a niche gaming-chip maker into the dominant supplier of the AI boom. He was, to many shareholders, not the face of Nvidia but Nvidia itself. That identification is precisely the problem.

What does the episode reveal about Nvidia's board?

The uncomfortable details are organisational, not personal. Huang reportedly had up to 60 executives reporting directly to him at any one time. Nvidia's board — described as toothless and, until this week, chairless — appears to have done next to no succession planning across his multi-decade tenure.

The result is a leadership vacuum at the heart of what the source calls the most financially consequential industrial revolution in history. Investors are now pricing in the absence of a credible bench. A founder-centric structure that rewarded speed in good times offered no protection when judgement failed.

Dr Porneetha Luthra, associate professor at Imperial Business School, wrote this week in City AM: "While charismatic leaders can seem intoxicating – admired, respected and sometimes loved – this is a very dangerous hierarchy." The caveat writes itself: admiration is not a governance mechanism.

Could the same thing happen at other founder-led giants?

The honest answer is that it could not — and that is worse. At Meta, SpaceX, Tesla and Palantir, founders such as Mark Zuckerberg, Elon Musk and Alex Karp are essentially impossible to remove, thanks to dual-share structures (two classes of shares, one carrying outsized voting rights for insiders). Huang, by contrast, held just 3.6 per cent of Nvidia and was, evidently, removable.

Consider the counterfactual the source raises: had it been Musk — who owns roughly a fifth of Tesla and nearly half of SpaceX — who fraternised with an alleged Chinese spy, shareholders would have had no such recourse. The same misconduct under a different share structure would have produced paralysis, not accountability.

Concentrated power has a real upside, and it deserves stating. It permits fast, bold decision-making unhindered by shareholder votes and board oversight. When the founder genuinely knows the industry, those calls are often correct and lucrative. But in a crisis, or in the run-up to one, robust governance is worth its weight in gold. Nvidia just demonstrated the price of discovering that too late.

Lloyd Blankfein, the former Goldman Sachs chief, captured the mood on X: "Sad about Jensen. Shakespearean. But as de Gaulle said, 'The graveyards are filled with indispensable men.'"

What does this change for UK-listed companies?

For London, arguably nothing — and that is the point. Under the UK Corporate Governance Code (the set of standards governing board leadership and accountability for listed companies), not a single FTSE 100 chief executive also serves as board chair. On the US S&P 500, more than four in 10 combine both roles. Any London-listed company allowing one person to hold both positions must explain its rationale to shareholders annually.

The London Stock Exchange recently watered down some rules in what has so far been a vain attempt to attract founder-led fintech and tech unicorn flotations. Those changes still fall far short of the free-wheeling American approach.

The skeptical read is unavoidable: the LSE's failure to win founder-led IPOs is routinely framed as a weakness. This week suggests it may be the premium. Nvidia's board did not prevent a crisis; it merely reacted to one, slowly and without a successor in hand. Under London's "comply or explain" regime, the question of who runs the company and who checks the person running it stays permanently on the record.

Governance makes for dull reading until the day it does not. For Nvidia's shareholders, that day cost them an HSBC.