Jensen Huang: Analyst thinks about Nvidia’s future

Nvidia Investors were on edge Thursday morning amid reports that the semiconductor giant’s board of directors had convened to discuss the company’s future with CEO Jensen Huang.

The New York Times on Wednesday reported that Hwang had a second affair with an employee. Mr. Huang had already come under intense scrutiny after he admitted to having a romantic relationship with a woman who U.S. intelligence agencies believe was a Chinese spy.

Nvidia has not yet made an official statement regarding Huang’s future with the company. However, CNBC confirmed late Wednesday that the board is meeting to decide whether to fire Nvidia after more than 30 years at its helm.

The company’s stock price has fallen 7% so far this week, after falling 4.3% on Monday and 5.5% on Tuesday, as Hwang dominated headlines around the world. The stock rebounded 2.9% on Wednesday, but was last down about 5.4% in premarket trading Thursday.

Here’s what analysts are saying about the company and its stock:

“In our view, we expect the next 48 hours to be a very fluid situation with Mr. Jensen’s writing indicating his tenure at Nvidia may be over,” Ives, a prominent tech bull, said in an evening note.

“Mr. Jensen has created a blinding moment for himself and Nvidia, and is now creating a complex web as Wall Street, Silicon Valley, DC, and the global tech ecosystem try to figure out what happens next.”

“We believe NVIDIA would be worth $300 per share if Jensen becomes CEO, and $225 per share if Jensen does not become CEO,” Ives added.

“While the stock price will obviously be under pressure with this fluid news, the reality is that it’s a dark day for NVIDIA, but the company will weather this turmoil and come out the other side and remain a core foundational part of the AI ​​revolution.”

Citi analysts announced overnight that they lowered their price target for Nvidia from $285 to $225.

“If Jensen is ejected, it would mark the end of an era,” Malik and Sylla said in a memo.

“Under his leadership, Nvidia has become a dominant force in AI infrastructure, a major beneficiary of the global AI spending cycle, and one of the most valuable companies in the world. Given his central role in strategy, product vision, customer relationships, and investor confidence, the change in leadership creates an overhang in stock price.”

They said Nvidia Chief Financial Officer Colette Kress may serve as interim CEO while the board evaluates external candidates.

“As much as there are lessons for NVIDIA about corporate governance and key-man risk…the reality is, NVIDIA still has 40,000 employees, there’s real talent there, and there’s definitely some enforcement within NVIDIA that will allow the board to execute on its existing plans and continue to run the company,” Toft said Thursday on CNBC’s “Squawk Box Asia.”

“I think the bigger risk is looking ahead for the next few years. NVIDIA is driven by a lot of thinking and thinking coming from the CEO, and if the CEO leaves, we’re going to have to find a replacement.”

“There’s no denying that the board has done a terrible job with succession planning,” Greifeld said Thursday on CNBC’s “Morning Call.”

“What the board will have to find out in the coming days and weeks is did Jensen lie to them? Right? Did he lie to them repeatedly on a variety of subjects? We don’t know. Has he basically lied for years and lost trust? I’m sure the board would want to keep Jensen in some role. Yes, his value to the company is huge.”

Greifeld doesn’t think there’s a premium for Nvidia stock, pointing to the low price multiple, “so there’s no bubble that’s going to burst here in terms of valuation.”

“When a new CEO comes in, they don’t have to make any decisions on day one, day 30, day 60. They have time to get their footing and come up with their own strategic vision,” he told CNBC. “I don’t think we’re going to change the content of our development plans for the chips that currently exist. So I think it’s certainly going to be a loss, but given the nature of the business and the long lead times for developing these chips and the long contractual relationships with our customers, it certainly gives us room for strategy.”

Leil told CNBC’s “Squawk Box Asia” that Nvidia’s board is putting itself in a bind by not having any succession plan in place.

“I’ve heard people compare him to Steve Jobs, who was removed from Apple, but (Jobs) did a succession plan and spent years nurturing and developing Tim Cook, so when he passed away and (Cook) took over, there was a true leader there,” he said. “Right now, NVIDIA doesn’t have that talent, so the choice would be either to keep Mr. Jensen and face all kinds of questioning, or to move on from Mr. Jensen. That would just make the stock uninvestable. So it doesn’t make AI trading uninvestable, but it certainly makes Nvidia uninvestable.”

Mr. Reil said he expects the stock price to “just keep going down from here.”

“There’s no obvious (replacement) that can step in and take over right away, so they might try to ride this out and keep him,” he said. “But there will be a lot of difficulty in doing so because he will have some responsibility.”

“The NVIDIA disruption has brought the risks of technology concentration into sharp focus,” Haefele and his team said Thursday morning.

“Without commenting on individual companies, this episode highlights the importance of investment diversification and selectivity as the AI ​​industry matures. We remain confident in AI’s long-term potential as computing demand remains strong and revenues resilient. However, rising expectations and potentially large differences in company outcomes may expose concentrated portfolios to company-specific setbacks.”

“Cheers Jensen fans,” Blaine said in his morning newsletter. “NVIDIA’s reliance on Jensen Huang is now exposed as a major market risk. The dominant company in the AI ​​industry lacks a clear succession plan, and Huang was seen as the public face of AI.”

“Confidence in the AI ​​field has been shaken in recent months,” he added. “Mr. Hwang’s departure could bring about instability and trigger a new collapse.”