Nvidia CEO Jensen Huang finds himself in some hot water in the wake of an extramarital affair with an alleged Chinese spy that may have created conflicts of interest and compromised national security.

The scandal sent shares of Nvidia down 10% over the past two trading sessions, leaving them down about 31% from an October 52-week high, painfully reminding Nvidia investors of something Tesla investors are used to: key man risk.

"Jensen is a very unique CEO. The organization is much flatter than a classic hierarchy and is built around his vision in an almost autocratic way," says Futurum CEO Daniel Newman. "There is no known succession plan, and there is no leader in the company who would be the clear next step if he had to step down."

Huang is Nvidia the way that Elon Musk is Tesla and SpaceX.

"It's the same song, different band," says Santa Clara associate professor Jo-Ellen Pozner, comparing the two companies. Both have strong founder-CEOs that exercise significant influence over their boards.

To be sure, founder-run companies, including Tesla and Meta Platforms, have generated a lot of wealth for investors. Founders "bring energy that you otherwise don't see with professional managers," says Columbia Business School professor Shivaram Rajgopal.

That doesn't mean boards should ignore their duty to plan for the future. When something like the Huang scandal happens, it demonstrates the "fragility" of megacap tech companies that tend to be run like private firms with family-run boards, adds Rajgopal.

So far, the fragility hasn't hurt stock returns. Key man risk has created some excess volatility for Tesla shareholders. Tesla is roughly twice as volatile as a typical stock. Recently, so is Nvidia.

Nvidia investors will likely trade the volatility for returns. Coming into Wednesday's trading, shares were up 455% over the past five years, almost 400 points ahead of the S&P 500.

Enduring a strong founder-CEO doesn't work all of the time, though. Tesla stock was up only 10% over the past five years.

Musk has survived long periods of so-so stock performance along with SEC fines and investigations, defamation lawsuits, buying and starting other companies besides Tesla, and forays into U.S. politics. Investors continue to more than back the iconoclast, awarding him a potential trillion-dollar payout in 2025.

Huang might survive his extramarital affair. Still, investors should understand the key man risk embedded in Nvidia, and think about what it means for stock volatility and who could take over if he left the company.

Tesla stock was up 1.9% in premarket trading Wednesday at $387 as the stock continued to recover from the post-election drawdown. Shares were north of $400 heading into the midterms, but closed below $344 on Thursday.

S&P 500 and Dow Jones Industrial Average futures were up 0.8% and flat, respectively. Nvidia shares were up 5.1% at $177.40.