‘It had to happen’ — Jim Cramer on Jensen Huang’s resignation and future for Nvidia stock

Jensen Huang has resigned as Nvidia CEO in a truly stunning fall from grace — but it was a necessary decision amid a widening affair scandal, Jim Cramer said Thursday. "It had to happen. There's way too much evidence," Jim said, moments after the chipmaker put out a press release announcing the leadership change. Shares are down more than 8% as of 9:40 a.m. ET. At its lows of the morning, the stock was off over 14%. Longtime CFO Colette Kress was named interim CEO. "I like Colette very much," Jim said. "I think she's going to be terrific in trying to figure out where the pieces are." He added, "I think she'll provide some needed order, so I'm glad she's the one they've given it to." As for Nvidia's stock, Jim reiterated our guidance from Wednesday night: We don't want to step in to buy the stock into this scandal-driven sell-off, but we're not giving up on the company either. Our advice Wednesday followed media reports that made clear Huang's tenure at the chipmaker he co-founded was hanging in the balance. The New York Times reported Wednesday night that Huang had an affair with an Nvidia executive who reported to him. That was on top of the affair he admitted to with an executive at a Singapore-based cloud computing company who U.S. intelligence agencies believe is a Chinese spy. Nvidia's board on Sunday said it had opened an investigation into the relationship. The decline in Thursday's session brings Nvidia's week-to-date losses north of 12%. Shares lost a combined 9.5% across Monday and Tuesday, as the investigation into Huang sent shockwaves from Silicon Valley to Wall Street and Washington, where Huang had developed a close relationship with President Donald Trump and advocated for limited export controls on Nvidia's market-leading AI chips. We downgraded Nvidia stock to a hold-equivalent 2 rating on Tuesday, citing the uncertainty around Huang's future. We've owned the stock since 2019, years before the launch of ChatGPT catalyzed the artificial intelligence boom and turned Nvidia into one of the world's most valuable companies and fueled Huang's rise into a celebrity CEO. Though Huang and his leather jackets had become synonymous with an Nvidia, Kress is a familiar face to the investment community. She's been leading Nvidia's earnings calls and appearing at Wall Street conferences, speaking with authority on not only the company's financial performance, but also higher-level strategy and the broader AI ecosystem. Prior to joining Nvidia in 2013, Kress worked at networking provider Cisco Systems, software giant Microsoft and chipmaker Texas Instruments. "I do trust her," Jim said. "She's is absolutely the one to have right now." Jim emphasized that Kress is far from the only talented and respected employee left at Nvidia, even though Huang leaves behind a unique flat organizational structure with a rumored 60 direct reports. Some people believe "there's 42,000 other people there who have no baring whatsoever because of the way the company was set up by Jensen. I think that's just not true," Jim said. With Nvidia set to report its fiscal 2027 third-quarter results on Tuesday night, Jim suggested the company should preannounce its results to, at least, add some financial uncertainty to a very uncertain situation. (Jim Cramer's Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.