Nvidia Stock Prices In 2 Major Risks As Fallout From CEO Jensen Huang Affair Unfolds

Nvidia’s (NVDA) loyal investor base is starting to worry that it’s the end game for new CEO Jensen Huang.

Huang admitted the affair in an email to employees on Sunday. Nvidia stock is down about 12% since the situation became public.

“At this point, the market is pricing in two major potential headwinds,” Kobeissi Letter strategists said. “First, the growing possibility that Jensen Huang will be removed as CEO. Second, (the) possibility that Nvidia’s technology or sensitive information may have been compromised.”

Nvidia’s board of directors launched a independent investigation in reports that the woman Huang had an affair with was allegedly a spy for the Chinese government.

The board said it hired the powerful law firm Wachtell, Lipton, Rosen & Katz to conduct the investigation. Former Acting U.S. Attorney for the Southern District of New York Joon Kim will lead the investigation.

While the stock’s decline is surprising given the strength of Nvidia’s business, the reason the stock hasn’t completely collapsed is because the masses generally don’t expect Huang to be ousted from the CEO role. And if he is forced to step down, Nvidia’s business is so important to the development of AI that it could prevent Huang from taking the lead again.

Call it blind optimism, if you will.

When asked how important Huang is to the AI ​​chip darling’s next few years, Niles Investment Management founder and longtime tech investor Dan Niles told Sozzi Unleashed that he “is not.”

“(Huang) has a very deep bench, and a historical example is what happened to Apple after Steve Jobs died. … Did the company collapse?” » Niles said. “So Jensen has done a great job of holding the people under him accountable. I think one thing that will happen is a successor will be named. The board will force that. And so I think it will happen from that.”

“Will the products in the pipeline, like when Steve Jobs passed away, keep the company going for the next two years? Absolutely,” Niles added. “But is Jensen very important to the company? Absolutely. So they’re two separate thoughts. But they can both coexist.”

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