Jensen Huang Is Gone. My Nvidia Game Plan Has Just Begun.
Is Nvidia now a buy? Here’s my trading strategy as I come in without emotional baggage.
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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.
How I’m Trading Nvidia
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 don’t have to deal with the baggage of unrealized losses, and I have no emotional attachment to the stock. I’m simply looking for some fairly fast profits.
I took a small position before the open at $156.20, and I’m now looking for spots to add. The stock went straight up after the open, but I expect some flipping pressure as the early buyers take quick profits. Then there are the stuck holders who want out and are trying to find the best exit point. Both groups will be selling into strength, and that should give me better prices.
The key support is $150. That is my stop if the stock breaks it, and it is also a potential add point if the stock tests it and holds.
Right now there is too much uncertainty in the situation. As soon as a new CEO is named, valuation becomes the focus, and by almost any measure Nvidia is a compelling value unless the entire AI sector blows up.
Game Plan
Tuesday’s earnings report will be the first under new leadership, and Kress will face questions about guidance, the financing and the CEO search. I’ll use weakness ahead of the report to add as long as $150 holds, and I’ll take some quick profits if the stock runs on news about a successor.
At the time of publication, Rev Shark was long NVDA.
