Nvidia CEO’s affair, which is on course to wipe as much as $250bn off the world’s most important AI company, is likely to be seized on by savvy investors as a rare chance to buy into the chip giant at a discount, affirms the CEO of deVere Group, one of the world’s largest independent financial advisory organisations.
The comments from Nigel Green come as Nvidia shares slide around 5% ahead of the US open, after the board launched an independent investigation into reports that Jensen Huang was targeted by a foreign intelligence effort.
He says: “This is, for now at least, a personal scandal, and the market is pricing it like a corporate crisis.
“A fall of this size is likely to knock somewhere between $200bn and $250bn off Nvidia’s value, yet nothing about this weekend’s news changes how many chips it sells or how badly the world needs them.
“Savvy investors can tell the difference between a reputational storm and a broken business.
“They’ll see lower entry points into the company at the heart of the AI boom, and I expect plenty of them to act on it.”
Huang has admitted the affair in a memo to staff. The board says it has no reason to believe national security or company secrets were compromised, while stressing its inquiry will examine all available information.
“The board’s position matters enormously here,” says Nigel Green. “If the investigation backs it up, the market is likely to move on quickly, and the discount on offer today will start to look like a gift.
“Investors buy dips like this when the fundamentals haven’t moved. Here, they haven’t.”
The scandal lands on a stock that was already bruised. Nvidia had fallen 25% from its October 6 peak, erasing roughly $1.4 trillion in market value despite booming revenue growth, after a brutal tech rout in which nearly $450bn was wiped from its value in a single session as investors reassessed AI infrastructure spending amid fresh regulatory concerns.
On some measures, its forward price to earnings ratio has dropped to around 13 times.
“Nvidia was already a quarter off its high before any of this broke,” he continues.
“Put a scandal on top and you get a valuation that looks remarkably cheap for a company still growing at this pace.
“The pullback we’ve seen since October was driven by worries about AI spending and regulation. The affair adds a layer of noise on top, and noise is what creates opportunity.”
Nvidia will report earnings on November 17.
“The results are likely to matter far more than anything in the tabloids,” notes Nigel Green.
“If demand for its chips stays as strong as we believe it will, attention is likely to swing straight back to earnings, and investors who held their nerve will be glad they did.
“None of this means ignoring the risks. Huang is the driving force of the company and there’s no obvious successor in place. Washington will push harder on Nvidia’s dealings with China.
If the probe finds anything more serious, the selloff could deepen, so investors need to weigh these risks carefully.”
Huang has had support from the White House, with President Trump describing him as a “fine person”.
Nigel Green concludes: “Chief executives’ private lives have made the front pages before, and their companies have kept on growing.
“The world’s appetite for computing power is likely to keep climbing for years. Data centres will keep being built, and the chips inside them still have to come from somewhere.
“Long after this episode fades, Nvidia is likely to remain at the centre of the biggest technology shift of our lifetimes, and the investors who saw past the gossip could be very well rewarded.”
