Shares of Nvidia are in the penalty box as the market tries to figure out what will happen with CEO Jensen Huang.
The company founder appears to have been caught in a Chinese honeypot as he admitted to an affair with a woman who US officials said was passing on information to Beijing. I have my doubts that this story would have played out the same way if it weren’t politically motivated. This is information that would likely have been passed onto him privately, rather than discovered by the media.
The problem is: That’s even worse.
My guess is this was leaked in order to further a political agenda and the timing right after the midterms supports that. The likely goal is to further cut down on Chinese connections to Nvidia chips, as Huang was adamantly opposed to chip curbs to China. The thinking is that he facilitated back doors to those sales or to vendors who would allow for virtual access, or that he turned a blind eye to it.
It’s highly unlikely that he could have told a spy anything that China didn’t already know about the manufacturing process so the problem now is that he’s in a battle with the US government. You can see how that looks on the chart, as it’s now right up against support from the March 2026 and Sept 2025 lows.
A break here might target the Nov 2024 high near $153, or even lower.
What Nvidia has going for it is valuation. It now trades at 21x trailign P/E, 18x forward P/E and 10.5x consensus 2028 earnings. If you’re bullish on AI, those are interesting numbers. Obviously, there is plenty of disruption coming on the chip side but Nvidia has opportunities of its own to disrupt things like self-driving cars, robotics and frontier models.
Huang likely tried to bullet the US government on AI and is now finding out that’s a losing battle. He will surely retreat but all indications is that he’s still a founder with an intense fire in his belly who wants to win the AI race. I would be a shame if he departed.
This article was written by Adam Button at investinglive.com.