Jensen Huang Is Out at Nvidia. Where Does NVDA Stock Go From Here?
The boardroom ouster of Nvidia (NVDA) co-founder and CEO Jensen Huang has forced Wall Street to calculate what the dominant artificial intelligence (AI) chipmaker is worth without the executive who built it.
Abrupt C-suite departures inevitably trigger knee-jerk selling, yet the initial shock does not automatically mean disaster for NVDA — let alone for the broader AI industry.
Just look at the divergence in performance between the chipmaker and the broader market. NVDA stock is off more than 30% from the all-time high it notched in October. Meanwhile, the S&P 500 is down only about 2.5% from its own record high.
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If the market truly believed corporate AI spending were faltering, the benchmark index — weighted heavily, or about 40%, toward mega-cap tech — would be in a steep drawdown, not a routine 2.5% pullback. Instead, investors are freaking out about one company. They’re not exactly abandoning all things AI.
“As for the broader AI trade, this is an NVIDIA problem before it is an AI problem,” writes Mark Malek, chief investment officer at Siebert Financial. “The biggest buyers are funding this buildout out of their own cash flow, and they need the chips no matter whose name is on the door.”
The board elevated Chief Financial Officer Colette Kress and appointed Nvidia’s first board chair. Malek notes directors “did the sensible thing and reached for a steward,” adding that Kress “knows every number in that order book” while naming a chair “fills a hole that should have been filled years ago.”
Nvidia after Huang
Leadership upheaval will leave an overhang on NVDA shares for some time. Even with capable executives running the show, the tech stock will forfeit the premium valuation multiple it enjoyed during Huang’s multidecade reign.
“The real question is how big a discount investors will put on Nvidia without Jensen,” writes Hendi Susanto, portfolio manager of the Gabelli Global Mini Mites Fund (GAMNX).
(Image credit: Kiyoshi Ota/Bloomberg)
Multiple compression, however, differs from deteriorating fundamentals. Susanto notes the ecosystem Huang spent decades building — CUDA, software, networking and established partners and suppliers — “doesn’t disappear with him.” With rapid innovation embedded in Nvidia’s engineering ranks and a two-year product schedule already in place, customers have no reason to cancel orders.
“The fundamentals have not changed overnight,” Susanto writes. “Using our value-investing discipline, we find the stock attractive at these levels.”
Demand remains robust
Constrained supply chains also protect Nvidia’s sales. Wedbush analyst Matt Bryson, who rates NVDA at Outperform (the equivalent of Buy), notes that material supply is largely contracted through 2027 or 2028, while rising rental rates for graphics processing units (GPUs) show processing demand still exceeds supply.
With the next-generation Rubin Vera architecture nearing deployment, Bryson writes that “however NVDA’s executive saga plays out, the company should have a prolonged period of solid financial results to find its footing.”
Severe sell-offs have punctured Nvidia’s ascent before. Anyone who put $1,000 into Nvidia stock 20 years ago knows their colossal gains required enduring periodic 50%-plus drawdowns — including a 66% decline during the 2021 to 2022 bear market.
“In the near term, investors should expect significant volatility in Nvidia,” writes Ken Mahoney, president and CEO of Mahoney Asset Management. “Longer term, we believe this could ultimately present an opportunity for investors with the appropriate time horizon. Nvidia remains a vitally important company with tremendous earnings power and a central role in the AI revolution.”
The bottom line on what comes next for NVDA
Without Huang, Nvidia loses a superstar CEO, and equity markets rarely give stocks peak multiples during leadership transitions. NVDA will contend with succession uncertainty and a compressed price-to-earnings (P/E) ratio until a permanent CEO can establish credibility.
That said, hyperscalers are buying GPUs as fast as foundries can fabricate them — and profits matter more than any single executive. As the saying goes, “the graveyards are full of indispensable men.”
