Nvidia CEO Huang resigns: stock falls 10% premarket
Jensen Huang exits Nvidia effective immediately. Kress is interim CEO, analysts cut targets, and AMD and Broadcom rise.
Key Takeaways
- Jensen Huang leaves Nvidia effective immediately; CFO Colette Kress steps in as interim CEO.
- Shares fell 10.3% in premarket trading and slid to near $159 after hours.
- Bernstein and Baird cut their price targets to $200 each, while AMD and Broadcom gain.
The chipmaker that defined the AI boom is now without its founder. On November 12, Nvidia announced that Jensen Huang is stepping down as president, CEO and board member. The stock had closed at $173.73 the day before; its record high is $243.
Kress at the helm, Jones leads the board
The power question was settled quickly, at least for now. Colette Kress, with Nvidia since 2013 and nearly 25 years in finance roles at Cisco, Microsoft and others before that, runs the company on an interim basis and stays CFO. Harvey C. Jones, a former Synopsys chief, becomes chairman. According to Finanzmarktwelt, citing the company statement, the board is reviewing internal and external candidates for the permanent job.
Earlier, Bloomberg reported via Finanzmarktwelt that Nvidia had already engaged an outside search firm to identify successors. The affair surrounding Huang had weighed on the stock since November 9.
Wall Street recalculates
The valuation picture is striking: according to Swissquote analyst Ipek Ozkardeskaya, at about $159 investors pay roughly 17 times expected earnings for the current fiscal year and only 10 times for the next. Quarterly results are due next Tuesday, with consensus at about $109 billion in revenue and adjusted EPS of $2.47.
Still, several firms are cutting. Bernstein analyst Stacy Rasgon downgrades to Market Perform and lowers his target from $400 to $200. Baird cuts from $500 to $200, and Morgan Stanley drops Nvidia from its top-pick list. Dan Ives puts fair value without Huang at about $225, versus $300 with him. Raymond James keeps a Strong Buy and Citi a Buy.
Who benefits from the Nvidia shock
Rivals are climbing. AMD gains about 3% and Broadcom roughly 2%, according to Bloomberg; in Taipei, Alchip and Global Unichip each rise more than 8%. Mandeep Singh of Bloomberg Intelligence sees AMD, Google's TPUs and Amazon as winners of potential market share shifts. Anna Wu of Floodlines Research cautions that moving AI workloads away from Nvidia takes time and money.