In a dramatic internal conflict that has come to light, Nvidia’s co-founder and former CEO, Jensen Huang Renzhun, reportedly engaged in a heated dispute with then-Chief Financial Officer Colette Kress (now interim CEO) over the company’s aggressive AI infrastructure financing strategies. The clash occurred in August, just before Huang’s departure from his executive roles.
Huang’s Criticism of Kress
According to a report by The Wall Street Journal on November 12th, Huang publicly criticized Kress during an executive meeting. He allegedly called her a “CFO who just reports” and not someone capable of formulating strategy or making decisions. The source familiar with the conversation stated that Huang interrupted Kress during her presentation, likening her to “a deer caught in headlights.”
This confrontation stemmed from discussions surrounding Nvidia’s escalating investments and financing commitments in AI infrastructure. Huang had convened a meeting with senior finance executives earlier in the summer to address concerns about the company’s expanding financial obligations.
Financing Controversies and Concerns
A key point of contention was Nvidia’s strategy of negotiating billions of dollars in financing guarantees to help companies that could not directly afford Nvidia’s chips. These deals were reportedly spearheaded by Huang’s son-in-law, Nico Caprez, who was working to cultivate emerging cloud service providers and data center developers into long-term Nvidia customers.
While Huang had initially pushed for these AI infrastructure deals, the increasing volume of commitments began to raise questions about whether they were exceeding reasonable limits. Huang expressed concerns about the mounting pressure on Nvidia, noting the growing independence of major cloud service providers from Nvidia’s offerings and the impending influx of ordered chips and memory. He described this situation as an “avalanche” heading his way.
Kress’s Role in Deal Scrutiny
The divergence between Huang and Kress was particularly evident regarding these financing guarantees. In the spring, Caprez and another Nvidia VP, Raj Mirpuri, had indicated to potential partners that credit support deals could be arranged within weeks. Numerous companies expressed interest in securing Nvidia’s credit backing to lower their financing costs, with Nvidia seeking a revenue share in return.
Sources involved in these transactions revealed that Kress raised numerous questions about the deals, including criteria for project selection, risk assessment for guarantees, and calculation of return on investment. Colleagues indicated that she also worked behind the scenes to moderate the pace of deals pushed by Huang’s son-in-law, who had been promoted to VP in January.
The OpenAI Deal and Market Reaction
Despite these internal debates, Nvidia continued to pursue these financing plans. The company was in discussions with OpenAI regarding financing guarantees for a significant data center project in Ohio. OpenAI planned to lease the entire facility and deploy approximately $300 billion worth of Nvidia chips, with Nvidia’s financial backing intended to bolster lender confidence for OpenAI’s long-term lease payments.
A Wall Street Journal report in July indicated that Nvidia was considering providing around $250 billion in financing guarantees for this project. Following this news, Nvidia’s stock saw a decline of about 5% the next day, wiping out approximately $250 billion in market value.
Although a deal with OpenAI was reportedly close, Kress subsequently revised the terms, cutting Nvidia’s initial financial commitment by roughly half. The parties eventually signed a reduced agreement on August 17th.
Nvidia’s SEC filings also detailed these arrangements. The company later agreed with SB Energy to provide financing guarantees of up to $105 billion for the PORTS Technology Campus data center in Ohio, linked to a lease agreement for approximately 4.25 gigawatts of IT load. These guarantees were structured to become effective incrementally, dependent on the data center’s construction and leasing progress, and subject to specific conditions.
Shifting Strategies and Huang’s New Vision
During this period, Huang also instructed employees to develop methods for evaluating the worthiness of financing guarantees, incorporating potential chip sales revenue into the assessment. By late August, The Wall Street Journal reported that Nvidia had paused some transactions within its new financing program, which aimed to secure revenue sharing by offering credit support to AI cloud service providers. Caprez and Mirpuri informed clients that the executive team and board were intensifying scrutiny of these deals, making rapid finalization more challenging.
Kress had previously defended Nvidia’s role as a financing supporter in the AI industry, arguing that these deals offered substantial returns and refuting criticisms of the model. “We recognize the scale of this support, and some people call it channel financing. We have a different view,” Kress stated in August. “The equity returns we get for our capital are going to be very significant.”
Meanwhile, Huang grew increasingly dissatisfied with Nvidia’s stock valuation. Reports indicated that the average monthly price-to-earnings ratio for Nvidia stock fell from 23 times in May to 16 times in October. The company had also implemented measures, including significant stock buybacks, to address investor concerns.
By October, Huang began to tighten external funding support. At a conference in Berlin, he met with CEOs of six major Nvidia chip purchasers, using an anecdote about a Japanese soup stand to convey his revised business strategy. Huang described waiting in a long line for soup, only to be denied a second bowl due to limited inventory and the need to serve other customers. He told the cloud computing CEOs present that the soup vendor understood business better, as they preserved value and diversity by not selling all inventory to a few clients. “You are not making my product live up to its value,” Huang reportedly stated.
Management Challenges and Transition
This internal conflict unfolded against a backdrop of Nvidia’s massive AI infrastructure investments. Kress prioritized risk control, deal returns, and financial accountability for financing guarantees, while Huang aimed to expand market demand for Nvidia chips through financial support. Their differing approaches highlighted the management challenges Nvidia faced in balancing industry expansion with financial risk control.
On November 12th, Nvidia officially announced that Huang had resigned as President, CEO, and board member, with Kress assuming the role of interim CEO while retaining her CFO position. The board stated it would consider both internal and external candidates for the permanent successor.
