What could Nvidia be worth without Jensen Huang?

Nvidia has lost about $1.8tn (€1.6tn) in market value since its record close on 6 October. After Jensen Huang’s exit, investors are weighing whether the chipmaker can keep growing at the pace that made it the biggest name in AI.

Not long ago, Nvidia was the world’s most valuable company. Now its future is far less certain.

Since Nvidia announced Jensen Huang’s resignation on Thursday, Wall Street analysts have been trying to size up what his departure means for the chipmaker and for the AI industry he helped build.

Huang, 63, was one of AI’s most visible champions. He fuelled the boom with advanced chips and financing deals across the supply chain. Nvidia invested in customers and suppliers, helping cloud providers and AI labs build out the infrastructure that runs on its chips.

Colette Kress, Nvidia’s finance chief since 2013, has taken over as interim CEO while the board looks for a permanent successor. Her appointment gives Nvidia a familiar face at the helm. The question for investors is whether she can keep up the pace of dealmaking that helped Huang drive the AI boom.

Dan Coatsworth, head of markets at AJ Bell, said, “Time will tell if investors warm to the approach while Nvidia searches for a permanent replacement. The AI industry is moving at an incredible pace and staying abreast of technology developments and spotting ‘tomorrow’s world’ opportunities is not easy.”

Kunjan Sobhani, a senior semiconductor analyst at Bloomberg Intelligence, said Huang’s departure was unlikely to change earnings estimates for Nvidia’s 2027 and 2028 financial years. He pointed to longer-term risks around succession, dealmaking and scrutiny over China as investors reassess the “Jensen premium”. Huang’s role, he said, ranged from setting product strategy to managing relationships with governments and AI labs.

Following weekend reports of Huang’s infidelity, share price losses wiped out $900 billion of the chipmaker’s market value between the previous Friday’s close and Thursday’s intraday low.

In total, the chipmaker has lost about $1.8tn (€1.6tn) in market value since its record close on 6 October, when shares ended the day at $239.24.

Coatsworth said, “While the shares have been knocked for six on the spy scandal and Huang’s subsequent departure from the company, no CEO is irreplaceable, and Nvidia’s day-to-day business will keep ticking along. It’s the long-term vision that could come under question.”

How much of Nvidia’s value was tied to Huang?

Investors are left with two questions. How much are they willing to pay for Nvidia’s future earnings under a new chief executive? And how much can the company earn if its customers slow spending on AI?

Following the news of Huang’s resignation, Nvidia shares fell 4.3% to $166.19 on Thursday, near their 52-week low.

At that closing price, Nvidia traded at 13.7 times expected earnings, compared with 38.9 times for rival AMD

On the surface, the stock looks to be heavily discounted, as demand for Nvidia’s products remains high. The steep selloff could therefore appear as a buying opportunity, but some analysts warn the safest bet is to wait for the dust to settle around Nvidia’s prospects.

Before the resignation was announced, analysts at Yorkville Ives, led by Dan Ives, estimated Nvidia was worth $225 a share without Huang as CEO, 25% below their $300 estimate with him at the helm, Investing.com reported.

Several brokerages landed near that figure with their own price targets. Bernstein and Baird cut theirs to $200, while Citi lowered its target to $225 from $285. Baird reaffirmed its target after the resignation, and Goldman Sachs stood by its buy rating and $220 target, citing Nvidia’s order backlog and product plans.

What investors will watch next?

Nvidia reports on Tuesday, 17 November, after the US market closes. Revenue more than doubled to $96.2bn (€86.8bn) in the quarter to 26 July, with data centres accounting for more than 90% of sales. Nvidia forecasts revenue of about $108bn (€97.5bn) for the quarter it is about to report, while analysts polled by Visible Alpha expect $109.3bn (€98.6bn).

The next quarter’s sales and margin forecasts will show how much growth Nvidia expects from here and how profitable it expects that growth to be. Investors will listen for signs that cloud companies are sticking to their spending plans, that Nvidia can deliver its new Vera Rubin systems on schedule and that its financing deals with AI customers will continue under Kress.

Tuesday’s outlook will give investors a fresh basis for valuing Nvidia’s earnings. Over the following quarters, the question is whether a permanent successor can keep customers and suppliers committed to the product and spending plans that drove the company’s growth under Huang.

This article does not constitute financial advice, always do your own research and invest according to your specific circumstances.

Source: www.euronews.com