Breaking Up With Nvidia

Are you kidding me? What on earth is up with this guy? He was the king of AI. Traders and investors loved him. He made all of us a lot of money. That’s all that’s needed for us to think of an individual as a great chief executive. He wore a leather jacket all of the time. We called him “The Fonz.” We thought he was cool. Apparently, he thought he was pretty cool, too. According to the New York Times, allegations have surfaced against Nvidia (NVDA) co-founder and CEO Jensen Huang that involve a second improper relationship with a woman other than his wife. Jensen Huang has been married since 1985.

This comes days after bombshell news broke over this past weekend that the CEO had been romantically involved with Alice Huang (no relation), who was an executive at Singapore-based data-center company Megaspeed. Megaspeed is a client of Nvidia’s that may or may not have been passing restricted high-end Nvidia AI-capable chips on to China. Alice Huang has been identified by U.S. intelligence agencies as a Chinese operative. Alice Huang, also known as Huang Le, is believed to have been recruited by China’s Ministry of State Security. Her reported goals included gathering information on Nvidia CEO Jensen Huang concerning advanced AI-capable chips and potentially influencing Nvidia or U.S. policy on chip export policy toward Mainland China.

If that wasn’t enough, the New York Times reported late Wednesday, new allegations that the CEO had been romantically involved with Kimberly Powell, a Nvidia employee whose most recent role is vice president of healthcare, reporting directly to the chief executive. Powell, with the company since 2008, helped establish the the company’s graphics processing units for medical imaging instruments. Apparently, Jensen Huang and Powell were seen on video in March, being affectionate at a hotel in San Jose, California.

Gee whiz. Calm down, dude. A Chinese spy? An employee? How important was it to you to feel powerful or to chase after pleasure? One minute, arguably the king of AI and a name revered across the universe of high-tech. Now, the punchline of jokes and trivia questions.

People think I’m out of my mind when I speak of things like honor. and integrity. Yeah, it takes discipline. Keeps you out of trouble, too. I struggle with sin, just like any truly honest man of faith. My sin that pops up too often, whenever I do extremely well in business, is arrogance or pride.

I have been fortunate enough to adapt to changing environments on Wall Street very well and sometimes I think it’s all me and I forget that I’ve been supported from above, raised by good parents and then by the grace of that same merciful God, enlisted instead of going straight to college. That taught me discipline and forced maturity at a young age.

I don’t speak from a mountain top. I speak from experience. If I can teach the younger Wall Streeters one thing about the business: You will be tempted, especially when you become powerful or make a lot of money. I always had one rule when, at Wall Street parties (the 1980s and 1990s were pretty crazy) and other places where this kind of stuff can get going. If your mother could see you now, would she be embarrassed? If the answer is yes, disappear. You owe these clowns nothing.

I sold the odd lots of Nvidia that I still had in inventory after the closing bell last night. Thankfully, I had sold half of what was left early last week and sold a bunch earlier this year. It made me sick to still have them in the Sarge-folio. Long live the new king (queen). Long live Advanced Micro Devices (AMD). Long live Lisa Su. Other potential kings could be Broadcom (AVGO) and Marvell Technology (MRVL).

Rain

Open your eyes, you can’t deny
It’s just a fantasy, yeah
Some things will end, some will begin
Some things will never be, yeah
Rain down on me
– Stanley, Kulick, Cuomo (Kiss), 1997

Here Comes the Rain…

When it rains, it pours, for Nvidia CEO Jensen Huang. According to the Wall Street Journal, Nvidia’s board was planning to meet, possibly as soon as last night, to determine Jensen Huang’s future. The report claims that the board is preparing to oust CEO the co-founder after he had two extramarital affairs. Both affairs are worse than simple personal matters, as one was with a client and suspected Chinese spy, and the other with a direct subordinate (who is also married).

Huang has been literally the face of his company, and the face of the AI-driven capital up-spend. He is known for his cool demeanor and his outward confidence. He appeared at conferences and events globally, speaking in a way that had all in attendance quieting down to hear his words.

Nvidia’s GPUs have become the central component behind what many economists see as the next industrial revolution. The company had started an independent investigation into Huang before the Powell news even broke. The U.S. Department of Justice is now leading multiple investigations into Alice Haung in what could become a national security nightmare for both the firm and the Trump administration.

This past Monday, the president claimed that Huang had told him that “He had absolutely no idea that the person in question was a spy.” Well, Jensen, did you think she would just up and tell you? Did you think it was love? A Nvidia spokesperson explained that the company prohibited all sales and shipments to Megaspeed in June of 2025, and that this ban is still in place. Nvidia got permission, however, from the U.S. Commerce Department unit overseeing export controls for parts and replacement components to be sent to the Megaspeed since then. I don’t know how to try to explain that.

CoreWeave Unravels

There’s a reason that I mocked CoreWeave’s (CRWV) fundamentals on Wednesday and warned investors to stay away. The company with one of the sloppiest balance sheets that I have seen is trying to go to the debt-driven well once again. Bloomberg News is reporting that the neocloud services provider is planning to raise at least $4 billion through an investment-grade loan. Morgan Stanley (MS) and Mitsubishi UFJ Financial Group (MUFG) are leading the potential deal.

Those two banks plan to syndicate the loan to other financial institutions and qualified investors in phases. Marketing will potentially start as early as next week. Plans have not yet been finalized. This move comes after CoreWeave raised its full year revenue forecast, which eased some investor concerns about its debt-heavy business.

I remind readers that CoreWeave ended its most recent quarter with a cash position of $5.589 billion, short-term debt of $10.572 billion and long-term debt of $36.301 billion. Adjusted for deferred revenues, the company’s current ratio stands at 0.48. For those that never took accounting, 1.0 is pretty much the bare minimum. Oh, and for that recent quarter, CoreWeave generated “free” cash flow of -$7.466 billion. Other than that, all is well.

Let Me Show You Something

The bond market was closed on Wednesday. You already know that. That and the fact that schools were also closed should have suppressed trading volumes. Indeed, composite NYSE-listed trade was light on Wednesday, down 11.1% from Tuesday’s levels. Aggregate trade across the membership of the S&P 500 landed 16.6% below the 50-day simple moving volume average for that index.

That said, with the Philadelphia Semiconductor Index up 5.7% and the Technology sector-select SPDR ETF (XLK) up 3.2%, composite Nasdaq-listed trading volume popped an incredible 37.6% on a day over day basis. Trade across Nasdaq names was heavier than every non-triple witch expiration or index reconstitution event day on Wednesday since May with the exception of last Thursday’s meltdown. On a federal holiday. That’s crazy.

Now, look at the very tech-centric Nasdaq 100. The index bottomed out last Thursday after breaking down from a Rising Wedge of bearish reversal in early October. On Wednesday, this index took back its 200-day simple moving average, which truly matters to professional managers. It met resistance at the 21-day exponential moving average, implying that swing traders generally sold tech at the highs on Wednesday. What matters today and going forward, is if on this Nvidia-inspired Thursday morning sell-off, that thin red line holds.

If it does, with improved readings for Relative Strength and a still sloppy daily moving average convergence divergence, professionals won’t bail completely. Look for lateral movement. Out of Nvidia, which is heavily weighted in all major U.S. equity indexes, and into Nvidia’s competitors. The tech trade made a lot of progress on Wednesday. Some of that may be for real. I sold NVDA. You know that. You also know that I beefed up my long position in AMD last week to the point that it was larger than it ever was and is now my heaviest weighted holding. I bet I’m not the only one doing this.

Economics (All Times Eastern)

08:30 – Initial Jobless Claims (Weekly): Expecting 195K, Last 189K.
08:30 – Continuing Claims (Weekly): Last 1.718M.

10:00 – Existing Home Sales (Oct): Expecting 3.94M, Last 3.99M SAAR.

10:30 – Oil Inventories (Weekly): Last -865K.
10:30 – Gasoline Stocks (Weekly): Last -222K.

1:00 p.m. – Thirty-Year Bond Auction: $25B.

2:00 – Federal Budget Statement (Oct): Last $-27B.

The Fed (All Times Eastern)

09:00 – Speaker: Cleveland Fed Pres. Beth Hammack.
10:00 – Speaker: Reserve Board Gov. Michael Barr.
11:30 – Speaker: Chicago Fed Pres. Austan Goolsbee.
1:10 p.m. – Speaker: San Francisco Fed Pres. Mary Daly.
6:30 – Speaker: New York Fed Pres. John Williams.

Today’s Earnings Highlights (Consensus EPS Expectations)

Before the Open: SPB (.94), YETI (.84)
After the Close: AMAT (4.06), CSCO (1.32)

At the time of publication, Guilfoyle was long AMD equity.