Power Lunch: NVIDIA CEO Exit, Tech Volatility and Crypto Pressure

NVIDIA

Across the shows: 124 speakers in other episodes, 113 bullish and 82 bearish calls, past 30 days

• Paul Hickey · Bespoke Investment GroupBearish

  Jensen Huang's exit is a major negative catalyst for Nvidia stock, but not the whole chip sector.

  Hickey sees the CEO departure as a major negative catalyst for Nvidia's stock, which he calls a real hit. He argues the impact on the broader semiconductor sector is much less clear. Nvidia has become largely decoupled from semis over the past several months, even negatively correlated with the sector over about five months, so he doesn't think the stock's problems will necessarily spread to the group. He compares the situation to a star quarterback leaving a team, which hurts, but the team doesn't always fall apart. He says he is not sure how important Nvidia is to the broader semiconductor sector.

  “But I think you think of it as this could be a major negative catalyst. For the stock, it is. But for the overall semiconductor sector, I'm not sure how important it is.”at 4:46

• Jan van Eck · VanEckUncertain

  The Nvidia chip-diversion problem is a policy question needing a transparent investigation; company appears compliant.

  Van Eck argues the Nvidia story has moved beyond the company into a governance and policy question. He points to export restrictions on chips sold to Singapore companies that the Commerce Department had approved, which he suggests may have been diverted, and asks whether Nvidia was a criminal enterprise, which he calls the toughest question. He says whatever the internal investigation finds, Washington needs a bipartisan and transparent investigation of what happened, who knew it, and who at the board, executive and administration levels was aware. He still says he thinks Nvidia is a compliant company and is not making accusations, so the outcome is unresolved. He also says this started in the spring and there is more to come.

  “To me, the NVIDIA story is not really anymore within NVIDIA. I think it's a larger governance question, meaning a policy question.”at 30:03

• Jay Woods · Freedom Capital MarketsUncertain

  Nvidia's CEO-exit dip is a near-term washout; a trade toward $180, not a core buy-and-hold now.

  The dip on Jensen Huang's exit is seen as a near-term washout. The story may have legs because the China espionage details are unknown, but the Jensen story is done and today's news eased the fear about whether he stays or goes. Earnings are the next catalyst. Woods expects a beat, with the call focused on what comes next, not the results. He sees $165 as the level to clear, then a move to $180, and says a successor announcement, which he does not expect soon, would take the stock back into the $180s. He would treat the stock as a trade now, take profits and reassess the long-term case. He owns it for a long-term trade, has not sold, and would get out if it breaks $150.

  “today looks like what we see as a near term washout. And I say near term carefully because this story may have legs.”at 43:53

US stock market outlook

• Kevin Gordon · Charles Schwab (Schwab Center for Financial Research)

  Market is in an aggressive rotation; capital moving beyond mega-caps is not hurting US equities.

  Gordon points to Nvidia's weight in the S&P 500, which peaked near 8.5% in mid-May and has fallen below 6%, so it is no longer the index's largest company. Over the same period about 70% of S&P 500 stocks rose. He takes this as evidence of an aggressive rotational market, in which capital has found other homes within equities. He says that rotation has not been detrimental to US markets. He adds that mega-caps having the largest index weights does not mean they are the best performers, which is a distinction he thinks matters.

  “But in that same time frame, 70% of the S and P 500 is up. So it really underscores and highlights this really aggressive rotational market that we've been in.”at 24:59

• Jan van Eck · VanEck

  Nvidia's growth slowdown would sharply cut S&P 500 earnings growth, and semis slowing would cut it further.

  Van Eck argues the chip sector matters a lot to overall index earnings. S&P 500 earnings growth for next year is expected at 17.5%. If Nvidia's growth is simply halved, S&P earnings growth falls to about 15%. If semiconductors as a whole have growth halved next year, S&P growth falls to about 12.5%. He concludes that what happens with semis is very important to the overall market, since the group carries a large share of index earnings growth.

  “So earnings growth for the S and P next year is expected to be up 17.5%. If Nvidia just slows its growth by half, the overall S and P earnings goes from 17.5% down to 15%.”at 27:00

US elections & politics

• Paul Hickey · Bespoke Investment Group

  New Congress is a marginal negative for tech, but the broader economy and market outweigh legislators.

  Hickey says the new political makeup in Washington may be a marginal negative for tech, since the incoming Congress could bring investigations and regulatory pressure. But he argues the economy and the market are much bigger than any group of legislators. He says a single company's fortunes, Nvidia included, will not determine the market's direction.

  “maybe at the margin it's a negative, but the economy and the market in general are bigger than what some legislators in DC...”at 9:30

US growth & recession risk

• Kevin Gordon · Charles Schwab (Schwab Center for Financial Research)

  AI data-center buildout does not clearly drive US jobs; fundamentals and consumer backdrop still resilient.

  Gordon argues the spillover from the Nvidia turmoil to the broader economy is limited. The consumer backdrop is fairly resilient and does not rely entirely on AI infrastructure spending. He says it is hard to draw strong links between data-center buildout and overall US employment, and employment kept growing this year, as the October jobs report showed. He does not read a negative macro signal from the market's moves. He also says labor is recovering even though it is choppy, and inflation is still an issue and relatively sticky.

  “Very hard I think to draw these really strong ties between an infrastructure build out for data centers and overall employment in The US. Yet overall employment in The US has continued to grow this year evidenced by the October jobs report.”at 33:14

Stablecoins & crypto policy

• Phong Le · Strategy

  SEC and CFTC rules enabling tokenization and stablecoin access are a long-term positive for crypto, whoever is in office.

  The SEC and CFTC are putting in place rules that allow tokenization of securities, access to stablecoins and modernization of financial rails. Phong Le argues this appeals to both Democrats and Republicans, so crypto is not a partisan issue. He expects some short-term volatility, possibly tied to changes in Congress, but says the setup is good for crypto over the long term regardless of who holds the White House.

  “sure, there will be some short term volatility... But I think long term, it's a good setup for crypto regardless of who's in the White House.”at 37:39