Jensen Huang Is Gone. My Nvidia Game Plan Has Just Begun.

Résumé détaillé

Jensen Huang is out, and Chief Financial Officer Colette Kress is running Nvidia on an interim basis. The stock briefly broke below $150 at the open and then traded straight up. I…

Is Nvidia now a buy? Here’s my trading strategy as I come in without emotional baggage.

Jensen Huang is out, and Chief Financial Officer Colette Kress is running Nvidia (NVDA) on an interim basis. The stock briefly broke below $150 at the open and then traded straight up. It is around $160 now, as I write, still down about a third from its high in early October.

Nvidia trades at about 17 times this year’s expected earnings and 10 times next year’s. Dan Ives of Wedbush puts the stock’s value at $225 without Huang, down from $300 with him, and Nvidia is trading about 30% below even that lower number.

Gene Munster of Deepwater Asset Management makes a good point about the timing. The news hits when investors were already anxious about the cost of the AI build-out, delays on data centers and the risk that new models will need less expensive computing. He argues that none of it changes the underlying reality. AI adoption is still below 1%, and Nvidia’s chips hold about 90% of the market even at higher prices. He sees the uncertainty as a window for new capital.

The AI sector was already in a state of flux over capital spending and profitability. Ultimately, Huang’s exit is going to accelerate the shakeout and give us better trading conditions, but it is going to have reverberations that last for a while.

The risk is the earnings estimates. The 2027 number assumes growth of about 70%, and part of that growth depends on the financing Nvidia provides to its own customers. Huang built that system, and an interim CEO who is also the CFO isn’t likely to expand it. If the smaller AI cloud companies buy fewer chips, the estimates come down. Even a cut of a third would leave Nvidia at about 15 times next year’s earnings.

The first thing to recognize is that there is a big difference between the emotions of those who already hold the stock and someone like me, who came into the day with no position.

I took a small position before the open at $156.20, and I’m now looking for spots to add.

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