"A Recipe for a Crash": Wall Street Estimates How Much Nvidia's Stock Could Be Worth Without Huang

Nvidia shares fell 8% in after-hours trading following reports that the company’s board of directors is preparing to remove CEO Jensen Huang amid allegations of extramarital affairs, including one with an alleged Chinese spy. In this article, Oninvest summarizes what Wall Street is saying about the risk of Huang’s departure, how it will affect the entire AI industry, and how much Nvidia’s stock might be worth without its founder and longtime leader.

Michael Burry, founder of the hedge fund Scion Capital (now liquidated):

"NVIDIA's business isn't going anywhere, but growth may slow, and, more importantly, margins may decline. The mismatch between the refresh cycle of NVIDIA’s GPUs and the time required to design, finance, and build data centers capable of housing the latest and greatest of them has become a serious problem.”

If it can no longer be “managed” through artificial overstocking of distribution channels, circular financing schemes, and coercion, then this temporary gap will become obvious to everyone, and it will hurt NVIDIA. That is the crux of what is happening.

The terms of the deals and the financing structure were the “secret ingredient” that gave even more power to an already dominant technology.

But it is precisely these conditions and this architecture, as I and some other experts argue, that are the real problem. Without all of this, the company—with its two-headed dragon of software and hardware—would be relatively protected from the CEO’s missteps.

Unfortunately, this company is not NVIDIA.

The quarterly results, which will be announced in less than a week, have already been reflected in the financial statements. They will be excellent. All the elements of the system—the conditions, the architecture—were in place. But it will take time to untangle and unravel this convoluted, Byzantine web.

"The NVIDIA bulls will have another good chance to exit their positions. Get out" (source: Cassandra Unchained).

Gene Münster, Managing Partner at Deepwater Asset Management:

"If a company is led by its founder and there is no clear-cut second-in-command, that's a recipe for a 20% drop in the stock price" (CNBC).

"It's important to remember: customers purchasing AI infrastructure will act in their own best interests. This means they will continue to buy the same number of Nvidia chips regardless of whether Jensen stays or goes."

My forecast: The stock will open at $150 (it’s currently trading at $160 in after-hours trading following the close of the main session). That will be about 20% below Friday’s closing price. However, I think the stock will recover from this drop fairly quickly and rebound” (X).

Jay Goldberg, an analyst at Seaport Research Partners:

“If he were fired tomorrow—or something were to happen to him—the stock would drop 20%. But that would only be a short-term effect, a kind of shock. He founded this company, built it up, and brought it to where it is today. He is the only CEO Nvidia has ever had, and he has structured the company so that he himself is at the center of all processes” (CNBC).

Dan Ives, Managing Director of Yorkville Ives Investment Bank:

"In our view, it looks like Jensen's days at Nvidia are numbered, and we expect the next 48 hours to be very eventful. Jensen has tarnished his own reputation and that of Nvidia, and now he's created a web of complications. Valuation without Jensen: $225” (X).

Eric Wallerstein, Chief Macro Strategist at Clocktower Group:

"While the future of Nvidia's leadership succession remains uncertain, the 'Nvidia way' (a kind of 'safeguard') upon which the entire AI market relies is also being called into question. Jensen helped forge a complex network of cross-financing among companies and, in essence, acted as the guarantor of the entire AI race, providing financial backing through Nvidia’s own balance sheet.”

"Removing this 'protection'—or even simply raising doubts about whether it remains available—will force investors to factor a higher risk premium into the value of assets related to artificial intelligence" (X).

Anna Wu, investment strategist and founder of Floodlines Research:

“The problem with Nvidia is that Huang is a very charismatic public figure, a true rock star of the industry. It will be difficult to find a suitable replacement for him. I think this could cause some volatility in the stock price in the near term. But there are always two sides to every coin: the company’s fundamentals remain strong. Its main asset is still its cutting-edge graphics processors, for which there is no alternative on the market. “Looking beyond the current volatility, I remain confident in the company’s prospects” (Bloomberg).

Heibe Chen, Senior Market Analyst at Vantage Global Prime:

"There is no clear-cut win for Nvidia—regardless of whether the board of directors decides to keep Jensen Huang or remove him. Ultimately, the decision comes down to how much risk the company is willing to take. Removing Huang would help Nvidia distance itself from the scandal, but it could lead to chaos in leadership and shake the foundations of its business strategy. Keeping Huang at the helm would ensure management continuity but would leave Nvidia embroiled in a protracted battle over the scandal. For investors, the main risk is that dealing with the fallout could divert attention from Nvidia’s core business and its future growth. In any case, Nvidia faces a difficult choice: lose the man who drove its growth, or allow the company to remain in the shadow of uncertainty regarding its future” (Bloomberg).

Josh Gilbert, eToro's Lead Analyst for the Asia-Pacific Region and the Middle East:

“Just two weeks ago, Nvidia without Huang seemed unthinkable, given everything he’s done for shareholders over the years. Now, this is a risk they have to factor into the stock price. Reports that the board of directors is preparing to replace him shift this risk from the realm of possibility to that of probability. And since the market knows Nvidia only under Huang’s leadership, it won’t be possible to determine how much it’s worth without him in just one day.”

None of this changes how many chips the largest tech companies want to buy. But investors need certainty in leadership just as much as they need growth, and right now, Nvidia can offer only one of the two. Markets have faced scandals involving CEOs before, but never at a company so crucial to the world’s top investment theme. Nvidia has neither a designated successor nor a second-in-command. “Therefore, if Jensen were to step down, the company would be left without a clear leader, and this would shake up the entire AI market—from its largest customers to the Asian suppliers that manufacture its chips” (Bloomberg).

This article was AI-translated and verified by a human editor