By Priya Raman

Nvidia shares closed 4.3% lower on Thursday after the company announced the resignation of founder and chief executive officer (CEO) Jensen Huang, recovering part of an opening plunge of more than 13%.

Nvidia said Colette Kress, its executive vice president and chief financial officer (CFO), will serve as interim CEO while the board searches for a permanent replacement.

Who takes control at Nvidia?

Kress said: “NVIDIA’s strength has always come from its people, and together with our leadership team, I am committed to building on the extraordinary foundation Jensen created over the last 33 years.”

Her appointment puts Nvidia’s finance chief at the helm during the transition. The board will consider candidates from inside and outside the company, preserving continuity now without closing the permanent race to insiders.

That choice matters because Nvidia built much of its recent prominence on selling many of the chips behind the artificial intelligence (AI) boom. The company has defied skeptics with strong revenue quarter after quarter, even as political backlash targets data centers and concerns mount about an AI financial bubble.

Nvidia’s long-run stock record shows both the scale of that business and the strain investors now feel. Shares have risen 429% over the past five years, but they sit about 17% below their level a year ago and had struggled to keep rising even before Huang’s scandal.

What triggered the crisis?

On Sunday, Nvidia said its board had launched an independent investigation “in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort.” The term denotes an alleged attempt by a foreign government to recruit or influence him.

Huang later acknowledged in an internal message to employees that he had been “unfaithful to his wife.” He wrote: “My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry,” the message said, in part.

Nvidia provided ABC News with that message, which also apologized for the affair’s impact on his wife and family. The message did not name Alice Huang or any other person.

Reporting around the case identified Alice Huang, a Chinese businesswoman described as a suspected spy who is not related to Jensen Huang. The Chinese government denied the allegations, calling them “baseless and purely slanderous smears against China.”

Neither Alice Huang nor her employer, Megaspeed International, responded to ABC News’ request for comment after The New York Times story broke. Bloomberg reported on Wednesday that Alice Huang currently lives in China.

Another report widened the personal-conduct scrutiny. The New York Times reported Wednesday that Huang also had an extramarital relationship with an Nvidia executive who reports to him.

Citing sources within Nvidia, The Times said the pair were allegedly captured on video being affectionate at a hotel during an Nvidia conference in March. The Times said it had not seen the video.

ABC News could not verify the reporting or the alleged video, leaving the claim unconfirmed.

How did investors react?

Nvidia’s 4.3% fall dwarfed the session’s broader moves. The Dow Jones Industrial Average, S&P 500 and technology-heavy Nasdaq each closed down 0.3%, leaving Nvidia underperforming each benchmark by four percentage points.

The gap was not subtle. The chipmaker had opened more than 13% lower before recovering some losses in a volatile session, pointing to a company-specific repricing around leadership and governance rather than a broad market sell-off.

What does the succession change?

For now, Kress provides a familiar operating hand as Nvidia’s CFO while the board searches inside and outside. The permanent successor will inherit a business with strong quarterly revenue, rising AI demand and persistent questions over data-center expansion, valuation risk and the founder’s conduct.

The dual responsibilities sharpen the board’s task. It must select a chief executive while also overseeing an independent investigation into foreign-intelligence claims, placing governance and institutional credibility alongside chip demand at the center of the transition.

The financial stakes are already visible. A 429% five-year gain remains substantial, but the roughly 17% year-on-year decline shows that Nvidia entered this test with weaker momentum than its longer-term record suggests.