Who would have guessed that a private scandal involving NVIDIA (NVDA Quick QuoteNVDA - Free Report) CEO Jensen Huang would escalate into a potential national security crisis, triggering a multi-billion-dollar stock market rout? Indeed, the company’s shares tumbled more than 8% at Monday's open before closing down 4.3% on Nov. 9, erasing roughly $193 billion from NVIDIA’s market value. 

The significant sell-off followed Jensen Huang's public admission of an extramarital affair and the board's swift launch of an independent investigation. Independent directors are now probing whether the tech pioneer was the unwitting target of a foreign espionage campaign tied to Alice Huang, a Chinese data center executive whose firm is accused of illicitly smuggling restricted U.S. artificial intelligence (AI) chips to Beijing.

For investors weighing exposure to Nvidia, the latest turn of events demands a moment to reposition their portfolio around this turmoil. Rather than owning the stock outright, channeling exposure through Nvidia-heavy exchange-traded funds (ETFs) may let investors capture the stock’s AI growth story while adding a layer of cushioning against this kind of headline risk.

But before identifying those funds, one must understand a single line of logic: will this event in the CEO's personal life affect the stock only in the short term, or will it affect the company's long-term governance — and how can ETF investment act as a shield against heavy losses amid the current turn of events?

Nvidia's Growth Prospects vs. the "Key Man Risk"

Nvidia's position as the leader in AI-accelerated computing remains intact. As far as the company’s fundamentals are concerned, in the second quarter of fiscal 2027, revenues surged 106% year over year to $96.2 billion, while operating income soared 124%.

The company’s central role in AI infrastructure, reinforced by expanding alliances — such as with SK Telecom and Rebellions, integrating third-party chips via NVLink Fusion — deepens its economic moat. Analysts broadly treat Nvidia as a core long-term growth holding, citing powerful free cash flow generation.

From a price-target perspective, the Zacks average price target for Nvidia is currently $328.13, based on short-term targets from 49 analysts, reflecting a solid upside of 83.7% from the last closing price of $186.64. These factors surely make NVDA one of the most sought-after stocks in the tech industry.

Yet, the recently launched investigation might be damaging for this tech giant, not necessarily due to the CEO’s alleged personal conduct, but because it highlights Nvidia’s succession uncertainty and substantial key-person risk. Huang, 63, is not only the face of the company but also its top-down operational core.

Internal records reviewed by CNBC reveal that Huang had between 33 and 60 direct reports as of early November, with no publicly identified successor or clear second-in-command being groomed to assume leadership. 

In this context, Melius Research noted that investors had expected Huang to lead Nvidia for at least another decade. However, the lack of a clear succession plan could prompt investors to assign a higher risk premium to the stock if concerns emerge about his ability to continue leading the company.

That said, NVIDIA’s underlying fundamentals remain strong, supported by sustained demand for its AI chips, a competitive advantage stemming from its CUDA software ecosystem and a robust balance sheet that provides financial flexibility to support future growth. While the reported investigation could weigh on Nvidia’s shares in the near term, it does not necessarily undermine the company’s long-term earnings potential or its appeal as a growth-oriented investment.

The Case for ETFs

Despite the solid growth opportunities that NVIDIA has to offer, no one can deny the fact that the stock’s leadership uncertainty has become a near-term threat in the recent turn of events. 

Investing directly in Nvidia at this juncture could expose investors to heightened uncertainty surrounding Huang’s leadership and the outcome of the reported investigation. Any escalation of the probe or potential management changes could intensify selling pressure on the stock.

Against this backdrop, Nvidia-heavy ETFs — though not entirely immune to the stock's volatility — can still offer a crucial buffer against the shock of a single-stock plunge, thanks to their diversified baskets.

These ETFs typically hold Nvidia alongside Microsoft, Apple, Broadcom, and other tech or AI beneficiaries. When Nvidia falls on an idiosyncratic event like this, those other holdings — which aren't moving on Nvidia-specific news — can partially offset the loss, and rotation into them can further cushion the blow. ETF rebalancing rules and rules-based index construction also spare investors from panicked single-stock timing decisions.

NVDA-Heavy ETFs to Buy

Considering the aforementioned discussion, those who believe in Nvidia's long-term growth prospects but want to sidestep "key man risk" and governance noise can keep the following ETFs in their portfolios:

Strive U.S. Semiconductor ETF (SHOC Quick QuoteSHOC - Free Report)

This fund, with net assets worth $184.8 million, offers exposure to 31 U.S listed semiconductor stocks. NVDA enjoys the first spot in this fund, holding 21.68% of its assets. Micron Technology and Broadcom hold the next two positions in SHOC, carrying 10.75% and 9.69% of the fund’s assets. 

SHOC has rallied 28% year to date and charges 40 basis points (bps) in fees. It traded at a volume of 0.01 million shares in the last trading session and sports a Zacks ETF Rank #1 (Strong Buy). 

VanEck Semiconductor ETF (SMH Quick QuoteSMH - Free Report)

This fund, with net assets worth $62.6 billion, includes 26 companies involved in semiconductor production and equipment. NVDA enjoys the first spot in this fund, holding 20.75% of its assets. Taiwan Semiconductor and Texas Instruments hold the next two positions in SMH, carrying 9.97% and 5.92% of the fund’s assets. 

SMH has soared 35.3% year to date and charges 35 bps in fees. It traded at a good volume of 14.65 million shares in the last trading session and sports a Zacks ETF Rank #1. 

VanEck Fabless Semiconductor ETF (SMHX Quick QuoteSMHX - Free Report)

This fund, with net assets worth $227.1 million, includes 23 companies involved in semiconductor production and classified as a fabless. NVDA enjoys the first spot in this fund, holding 20.04% of its assets. Broadcom and Advanced Micro Devices are the fund’s second- and third-largest holdings, accounting for 12.63% and 7.17% of SMHX’s assets, respectively.

SMHX has soared 30.7% year to date and charges 35 bps in fees. It traded at a volume of 0.06 million shares in the last trading session and carries a Zacks ETF Rank #2 (Buy). 

Vanguard Information Technology Index Fund ETF (VGT Quick QuoteVGT - Free Report)

This fund, with net assets worth $145.1 billion, offers exposure to 318 companies in the following three general areas: technology software and services, technology hardware and equipment, and semiconductor and semiconductor equipment manufacturers. NVDA enjoys the first spot in this fund, holding 17.58% of its assets. Apple (AAPL Quick QuoteAAPL - Free Report) and Microsoft (MSFT Quick QuoteMSFT - Free Report) hold the next two positions in VGT, carrying 15.91% and 11.16% of the fund’s assets, respectively. 

VGT has risen 18.8% year to date and charges 9 bps in fees. It traded at a good volume of 6.23 million shares in the last trading session and sports a Zacks ETF Rank #1. 

State Street Technology Select Sector SPDR ETF (XLK Quick QuoteXLK - Free Report)

This fund, with assets under management worth $114.2 billion, includes 76 companies from technology hardware, storage and peripherals; software; communications equipment; semiconductors and semiconductor equipment; IT services; and electronic equipment, instruments and components industries. NVDA holds the second spot in this fund, carrying 14.94% of its assets. AAPL and MSFT hold the first and third positions in XLK, carrying 16.52% and 13.03% of the fund’s assets, respectively. 

XLK has gained 18.7% year to date and charges 8 bps in fees. It traded at a good volume of 15.20 million shares in the last trading session and sports a Zacks ETF Rank #1.