Nvidia Shares Sink on New Allegations Against CEO Jensen Huang

NVIDIA

Across the shows: 111 speakers in other episodes, 92 bullish and 64 bearish calls, past 30 days

• Guy Adami · CNBCBearish

  Huang should face the same consequences as any other CEO; more damaging stories are likely.

  Adami argued that no single person should be too big to fire. The first revelation should have ended Huang's tenure, as it would for a CEO at any other US company. He expects more stories to follow because such scandals usually come in clusters.

  “If this had been a CEO of any other company in The United States, chances are the axe would have fallen already in terms of his or her tenure at the firm. ... it's never just one cockroach with these things”at 8:50

• Tim Seymour · Seymour Asset ManagementBearish

  Nvidia isn't priced for life without Huang; the stock faces an overhang and isn't a buy.

  Seymour doubts the market has priced in life without Huang and expects the company to need a workaround to firewall the damage. He notes the rest of the market has done fine since Monday while Nvidia lagged, so investors have partly moved on. He flags an overhang from congressional scrutiny of Nvidia's role in US policy and sees Huang's chance of leaving rising. He says there is no reason to buy the stock now, though it may be okay over time.

  “if these allegations continue to be true and more proven, I think it's gonna be okay, but not necessarily for this stock.”at 10:18

• Carter Braxton Worth · Worth Charting LLCNeutral

  Much of the Nvidia news appears priced in; the after-hours drop was small.

  Worth thinks much of the bad news is already in the price. He pointed to the modest after-hours move of only a few dollars and said the stock is well into a support zone. He also said it is unclear whether it can hold there or will fall further.

  “My hunch is that a lot of this is priced in, meaning look at the after hours reaction, it's not that big, right? It's moved down $3 or $4”at 11:49

• John Chambers · JC2 VenturesUncertain

  How Nvidia handles this crisis will decide whether it is a great company beyond one leader.

  Chambers said the way Nvidia handles the crisis will determine whether it is a great company with a strong leadership team beyond one person. He drew on his Cisco experience, where handling a near-death moment well mattered. He framed the situation as normal in the current environment.

  “how they handle this would determine if they're a great company and a great leadership team beyond one person.”at 20:58

• Karen Finerman · Metropolitan Capital AdvisorsBullish

  Buy Nvidia on any dip; Huang's departure would be a clearing event.

  Finerman views a Huang exit as a clearing event that would knock the stock down but mark the bottom. She said she would start buying after the after-hours drop without going all in, and she already owns some shares. The stock will likely be hit as the story unfolds, and that will be the time to buy.

  “Some, but I would start buying here. ... I think this was an event that would be a clearing event. I wouldn't be all in here. I mean, I'm already long some.”at 32:03

• Dan Ives · Yorkville Ives & Co.Bullish

  Board likely to remove Huang; without him Nvidia is a $225 stock and a clearing event.

  Ives thinks the board will likely remove Huang as the stories pile up, and that the market will start pricing that in. He views Huang's exit as a clearing event that would reset the stock, which he values at $225 without Huang. He says the exit could be positive for the company as it goes through congressional hearings, even though it is a black eye.

  “One, without Jensen. So let's say Jensen's gone, it's a $225 stock in our view. So to me as a clearing event, I would agree with that.”at 35:36

• Dan Ives · Yorkville Ives & Co.Bullish

  Nvidia is two to three years ahead of rivals, including China, and keeps AI spending demand.

  Ives argued that Nvidia is two to three years ahead of every competitor, including China, on chips. That lead means the scandal does not change overall demand. He said the roughly $3 to $4 trillion of AI spending will flow to where Nvidia plays.

  “They're two to three years ahead of any other competitor, including China from a from a chip perspective. So that doesn't change the overall demand or what I view is where the 3 to 4,000,000,000,000 is gonna be spent where NVIDIA plays.”at 35:50

• Guy Adami · CNBCBearish

  Nvidia has another leg lower to around $145, as a new CEO will scrutinise the company.

  Thinks the sell-off may have been driven by whispers of the news, and that buying on news like this can happen when it peaks. He still expects another leg lower, and finds the roughly $145 level reasonable. He argues that whoever succeeds Huang will go through the company 'with a fine tooth comb', and that any problems will come out. He links this to the company's very flat structure.

  “I still think there's another leg lower. I think that 145 ish level that we flagged is reasonable.”at 37:15

• Tim Seymour · Seymour Asset ManagementBullish

  Nvidia's valuation was already compelling and it stays a juggernaut once the leadership issue is resolved.

  Says the company's core business and its valuation were already very compelling before the news. He expects Nvidia to remain a juggernaut once the situation is worked through, though he warns that the time needed and the overhang from the investigation and Congress will weigh on the stock. He expects the culture to change, since the flat structure must now operate differently. He compares the night to 2009, when the world was changing quickly.

  “I would just get back to some of the parts, their core business, the valuation already was very compelling... Nvidia as viable company once this is worked through is still going to be a juggernaut, I assume.”at 38:24

• Carter Braxton Worth · Worth Charting LLCBullish

  The market has priced in Huang's exit, so a decision to keep him could lift the stock.

  Argues the stock has already fallen to about $1.62 from a low of $1.56, which means the market is pricing in Huang's departure. He asks what happens to the share price if the company says it will keep him, and suggests the market would like that. He adds that someone might want him out, so the decision could go either way.

  “It's priced in, so now they go and say he's officially out... What happens if they say no, we're going to keep him? You think the market likes that or doesn't like that?”at 39:35

• Dan Niles · Niles Investment ManagementBullish

  Nvidia should outperform from its bottom over the next week or so, despite the CEO news.

  Expects a sharp drop after the CEO news, with Tuesday earnings as the 'ultimate clearing event' and Wednesday's trading as the reaction. He argues the stock is a relative long from wherever it bottoms, because the company has many products in the pipeline. He cites Apple in 2011, when the stock rose 26% after Steve Jobs's death on the strength of its product pipeline, and says Nvidia has 'a ton of products in the pipeline right now'. He sees the sell-off as 'just another correction like you always get in semiconductors', with AI token growth of 10 to 100x driving demand. If Nvidia falls to around 10x earnings while Broadcom sits near 17x, he thinks the two could converge within a year, since both face the same forces. He is less sure of the short-term path, asking whether the stock could fall again if Tuesday's guidance is weak.

  “And I think relatively, this should start outperforming from wherever it bottoms over the course of the next week or so.”at 45:04

• Jon Fortt · CNBCBearish

  Without Huang making day-to-day decisions, Nvidia may not move as fast as its flat structure has allowed.

  Calls this leadership scandal unprecedented in his career. He says Nvidia's flat structure, where Huang has no layers of management, has let the company move quickly, and the whole organisation has run through him. If Huang is only removed from the title but no longer makes day-to-day decisions, Nvidia may not be able to move as quickly or decisively. He also questions whether Huang can keep personally driving partnerships and acquisition talks. He contrasts this with Steve Jobs, who planned a smooth handover at Apple, and disputes Dan Niles's comparison.

  “If he's not participating day to day making decisions, that's something else. I'm not sure that NVIDIA can move anywhere near as quickly and decisively as they have.”at 50:23

Advanced Micro Devices

Across the shows: 16 speakers in other episodes, 16 bullish and 1 bearish calls, past 30 days

• Tim Seymour · Seymour Asset ManagementBullish

  AMD is a strong number-two AI chip player, though not cheap versus Nvidia; Seymour is long.

  Seymour says he is long AMD and likes it, but it is not cheap relative to Nvidia after its run. He cited record third-quarter results, data center sales growing in the high 90s percent, and the ramp of its Helios platform. He called AMD a distant number two in data-center chips.

  “I'm long in AMD, I like it, but it is by no means the calculus that you look at Nvidia and say, Wow, this is super cheap.”at 15:01

• John Chambers · JC2 VenturesBullish

  Lisa Su is a superstar leader he would bet on; AMD's leadership is strong.

  Chambers called Lisa Su a superstar and said he would bet on her all day. He said he informally advised her for nine years since she took the job, and that he presented her with the CEO of the Year award. He described her as really good.

  “she's a superstar. I'd bet on her all day. I was her informal advisor for nine years”at 21:13

• Jon Fortt · CNBCBullish

  The AI ecosystem will hedge away from Nvidia, so AMD benefits from the uncertainty.

  Argues that the AI ecosystem will now hedge its bets away from Nvidia. Nvidia had encouraged companies in its ecosystem to bet on the Nvidia stack, but with this much uncertainty, few will keep doing so. He concludes that the benefit goes to AMD and others.

  “The entire AI ecosystem now is going to have to hedge its bets away from just NVIDIA... So that means benefit accrues to, of course, AMD and to others as well.”at 50:35

Apple

Across the shows: 53 speakers in other episodes, 63 bullish and 39 bearish calls, past 30 days

• Carter Braxton Worth · Worth Charting LLCBullish

  Apple has strong relative strength and an uptrend that isn't parabolic; stay long.

  Worth said the chart shows strong relative strength and an uptrend that is not parabolic, so he would stay long. He is not calling an inflection point, but he said he would hold the shares he owns, and he is holding.

  “you have to respect the relative strength, respect the uptrend, and it's not so parabolic. I would say it's a stay long, be long.”at 26:12

• Tim Seymour · Seymour Asset ManagementBullish

  Apple's guidance is above estimates and margin leverage and falling memory costs support the stock.

  Seymour argued the margin pressure flagged after the report is already factored in. He said Apple's revenue guidance moved above the prior estimate and that Apple should gain more leverage on margins. He also expects memory costs to fall as Apple gains more control over its supply, and he said the products are more vibrant than ever.

  “The sense here is also that Apple is going to be able to extract more leverage on the margin side. Also, I think the market is pricing in that memory does come down. So you stay long.”at 27:12

• Guy Adami · CNBCBullish

  Valuation has not mattered for Apple, which is rallying as money rotates out of Nvidia.

  Adami has raised valuation concerns many times and the stock has stayed extended without a reversal. He cited Apple's roughly 8% rise over five sessions since November 3, which he tied to money moving out of Nvidia. He also noted a fresh analyst upgrade and called the stock lower-left to upper-right.

  “I've brought up valuation how many dozens of times over the year, and it's been extended all those times, and it has not mattered.”at 27:41

CoreWeave

Across the shows: 94 speakers in other episodes, 30 bullish and 103 bearish calls, past 30 days

• Karen Finerman · Metropolitan Capital AdvisorsBullish

  Canceling CoreWeave's insider 10b5-1 selling plan removes a key overhang; the bounce isn't over.

  Finerman saw the cancellation of CoreWeave's 10b5-1 selling plan as huge because heavy insider selling had been a central worry on the way down. She added that the stock has high short interest, though some of that is convertible-bond holders hedging by shorting. She judged the rebound not finished.

  “I think that the [10b5-1] cancellation is huge. It was a big question on the way down. ... I don't think the bounce is over.”at 4:39

• Carter Braxton Worth · Worth Charting LLCBearish

  CoreWeave's fundamentals are weak; the rally is a dead-cat bounce given default-implied credit risk.

  Worth argued the rally is only a bounce: the stock is still down about 67% from its all-time high and back to its IPO-era level. He questioned whether CoreWeave's interest expense exceeds its operating income. He cited CDX pricing that implies roughly a 60% probability of bankruptcy within five years, which he called a dead-cat bounce.

  “[...] their interest expense exceed their operating income? If you look at the CDX, they're implying 60% probability of bankruptcy in the next five years”at 5:41

AI: overall outlook

• Guy Adami · CNBC

  AI trade still has foundational cracks; the relief rally improves structure but doesn't fix them.

  Adami said the AI trade's problems have been building since mid-June and early July, showing up in semiconductors and memory names. Today's relief rally on heavy volume makes the structure somewhat sounder, but he still sees foundational cracks.

  “But the problems in the AI trade have been going on, I think, if you really look at some of these charts since the middle of June, early July, and that's manifested itself in semiconductors”at 2:55

• Tim Seymour · Seymour Asset Management

  With CoreWeave, OpenAI and Anthropic all strong, the AI trade can keep going higher.

  Seymour pointed to CoreWeave's results, OpenAI's revenue number, and Anthropic's reported quarterly revenue and oversubscribed deal as evidence that the AI trade is healthy. He said the market would be set up to rise even if Huang leaves. He concluded the setup is that it can all go higher.

  “If they're all okay and Jensen Huang is out, what would you do with that setup? And I think the setup is that it all can go higher.”at 13:49

• John Chambers · JC2 Ventures

  AI is in its second inning and will be bigger than anything seen; his AI holdings grow 40-150% a year.

  Chambers says AI is here to stay and is in the second inning, and he expects it to be bigger than any technology he has seen. He cites his portfolio of AI companies, most of which are growing 40 to 150% a year, and he expects AI to run about five times the speed and output.

  “AI is here to stay. We are in the second inning of it. It's going to be bigger than anything we have seen, in my opinion, in my life.”at 18:45

• Dan Niles · Niles Investment Management

  The AI trade depends on technology, not on Jensen Huang, so it will continue without him.

  Argues that the AI trade 'is not about one man' but about the technology. He points to the number of big companies financing the buildout, including Nvidia, Broadcom and Microsoft, and to investors in Anthropic's IPO. He expects OpenAI, Google and Anthropic to keep developing open-source models, and Nvidia to keep shipping chips that were already in the pipeline for the next two years.

  “This AI trade is not about one man. Okay? It's about the technology. OpenAI, Google, Anthropic, all these guys are gonna keep developing open source models.”at 46:24

US–China AI & chip race

• Guy Adami · CNBC

  Congress will likely rein in China-related tech dealings, tightening export restrictions.

  Adami expects a new Congress to act on tech exports to China because the scrutiny is focused on China and on US companies' ties to its tech market. He says the Nvidia scandal makes tighter restrictions close to a sure thing, since lawmakers will feel they must rein things in.

  “I think if you're sitting in the halls of Congress right now, you have to be saying to yourselves, We've got to rein some stuff in right now.”at 16:23

• John Chambers · JC2 Ventures

  Trust in China is broken; be very selective on export of the most advanced technologies.

  Chambers said the trust factor with China is broken, and that he no longer trusts Chinese leadership as he once did. He stopped doing business there. He said companies must still play in China, but for the most advanced technologies tied to defense and national control, the US should be very selective about what it allows.

  “in terms of the very advanced technologies that are very important to our defense and our country's leadership and control over our destiny, I think we have to be very selective”at 19:57

• Dan Niles · Niles Investment Management

  Nvidia chips reach China through black markets, while Beijing pushes firms toward domestic chips.

  Says his long-held view is that Nvidia chips reach China through a black market, going through the Middle East and Asia, and that this applies to DRAM as well. He argues China is now telling its companies not to depend on these chips and to buy domestic alternatives such as CXMT, YMTC and Huawei's chips. He describes this as China trying to build its own ecosystem, and expects the US may take similar steps.

  “These chips are finding their way into China... There's a black market for semiconductor chips... China, for their part, is saying we don't want our companies addicted to these chips. You guys better buy domestic.”at 42:48

AI & jobs

• John Chambers · JC2 Ventures

  AI will create many jobs, but the industry has done a poor job on job losses and training.

  Chambers says AI will create a lot of jobs, but the industry has done a terrible job explaining how average citizens benefit. He said it has not addressed the legitimate concerns about job losses or how workers will be trained, or why data centers are in communities' interest.

  “And it's going to create a lot of jobs. But the industry's done a terrible job of both saying, how does the average citizen win in this? And how do we address the legitimate issues of job losses?”at 19:11

Cybersecurity

• John Chambers · JC2 Ventures

  AI cybersecurity is the best bet; CrowdStrike, Palo Alto and Rubrik are up 50-80%.

  Chambers said AI cybersecurity will change things in a unique way. He pointed to CrowdStrike, Palo Alto Networks and Rubrik, which he said are all up 50 to 80% over the last six months, as evidence the market is already rewarding the theme. He called it a portfolio play.

  “AI cybersecurity is gonna make things go in a very unique way, and I would do it as a portfolio play for whatever my opinion is worth.”at 24:00