When the bad news is all out, when the investigations are all done, and when an inevitable new leader is named, Nvidia will go back to making chips. And the world will need them as much as it did last week.
Nvidia rose to the top of the world largely because of its charismatic founder, Jensen Huang. No one can or should debate his influence in the astounding rise of generative artificial intelligence. Large language models have changed computing and the future of how we work and think. And Huang's graphics processors, first made to power videogames, have been at the center of it all.
On Thursday, Huang resigned as CEO amid a swirl of allegations (and some acknowledgments) tied to extramarital affairs and national security issues.
"Nvidia Board of Directors announced today that Jensen Huang has resigned as President, Chief Executive Officer, and a member of the Board, effective immediately," the company said on Thursday morning. It was a statement no one would have contemplated just a month earlier.
But it became increasingly likely on Sunday evening, Nov. 8, when Huang said, "I was unfaithful to my wife. My actions hurt her and our children." The stock fell on the news and continued to fall through Huang's resignation on Thursday. At a recent $164, Nvidia shares are down 31% from their October peak.
The self-induced crisis is a chance for customers, Wall Street, and Nvidia itself to reassess. To be frank, Nvidia's stock hasn't been working lately, even with Huang in place. For more than a year now, investors have treated Nvidia as a value stock, giving it little credit for its tremendous growth prospects.
Now, it's valued like a distressed asset. A new CEO will be painful across the board, but it's a chance for the business to prove itself yet again. And the good news, as Barron's has long argued, is that Nvidia's products are technology gold.
"Nvidia remains one of the best stocks that I have ever found and invested in," says Bill Gunderson, partner at GCG Advisory Partners. "Focus on earnings! Not Jensen."
Those earnings are still something to behold. Nvidia is expected to earn more than $200 billion in calendar-year 2026, according to FactSet, up from less than $600 million in 2012, the year that University of Toronto researchers used neural networks trained on graphic processing units to beat traditional computers in a visual recognition challenge -- a key moment in the development of deep learning and AI.
Earnings have grown at an average annual rate north of 80% for the past five years. For the next three years, Wall Street analysts expect them to grow 40% annually.
Normally, that growth would come with a big price/earnings ratio. Any conservative investor would be happy with a multiple that matches a company's earnings growth rate. Instead, Nvidia now trades at less than 12 times estimated earnings for the next 12 months. It's near a record-low P/E ratio for the stock and a major discount to the S&P 500 index's 18 times.
Baird analyst Tristan Gerra, who downgraded Nvidia shares to Neutral from Outperform and became the first analyst to call for a CEO change this past week, believes that a fair P/E ratio is 13 times earnings. His fiscal-year 2028 earnings estimate (Nvidia's fiscal year ends in January) is $20 per share. That implies a $260 stock price in about a year, meaning a cautious analyst sees 60% of gains from recent levels.
If Nvidia somehow returned to its average five-year P/E of close to 30 times, the stock would be worth $450 today, roughly 160% higher.
There are also signs that a bottom is forming in Nvidia stock. It has been the heaviest week of trading in Nvidia stock since April 2025. That feels like capitulation, says Fairlead Strategies founder and market technician Katie Stockton. She isn't making a fundamental call on Nvidia stock. Technical analysts look at stock charts and market history to understand investor behavior; Stockton sees support for shares around $164 and additional support below that around $150. It suggests, at worst, $20, or 10%, of downside. The upside ranges from 50% to 150%. In terms of risk versus reward, Nvidia is now a rare find.
"I've watched corporate dramas like Nvidia play out for 30 years," says One Global ETF co-founder Gary Black. "The day Jensen resigns, which is when there is maximum uncertainty and portfolio managers finally confront reality, investors should buy."
Case closed. Or maybe not. Nvidia's story isn't only about earnings. Its products and its balance sheet have become the connective tissue for the entire AI trade.
And, for now, the company faces a leadership vacuum. Chief Financial Officer Colette Kress has taken the reins on an interim basis, but she isn't likely to be the board's permanent choice. Nvidia was a famously flat organization under Huang, who had dozens of employees reporting to him directly. The flat management structure may have boosted innovation, but it has left investors -- and perhaps the company itself -- unable to identify a credible successor.
"Jensen is Nvidia's Steve Jobs," says Futurum Group CEO Daniel Newman. "That does not mean they cannot find a Tim Cook in the future, but the company has not been set up for that."
Tim Cook is Silicon Valley shorthand for a successful leader following a legendary founder. In the 15 years after Cook took over the CEO role from Jobs, Apple stock returned roughly 2,700%.
Nvidia's bench might not be as bare as feared, though. Melius Research analyst Ben Reitzes sees multiple potential internal candidates, including Vice President Ian Buck, who oversees the hyperscaler business and the valuable CUDA programming platform that has kept customers using Nvidia silicon. There's also Jonah Alben, who runs GPU Engineering, Chief Technical Officer Michael Kagan, Chief Scientist Bill Dally, operations and supply chain head Debora Shoquist, and Executive Vice President Nick Parker, who spent 26-plus years at Microsoft.
Outside the company, plenty of practiced executives would jump at the chance to run the Nvidia juggernaut.
But none of them is Huang, a reality for which the stock has been more than discounted.
As forward-facing and unique as Huang is, or was, Nvidia will survive. The stunning resignation is only a "measured negative" for the stock, says Goldman Sachs analyst James Schneider. He likens Nvidia to Apple. Everyone with an iPhone, iCloud account, and Apple TV knows it's tough to leave the Apple ecosystem. It's just as hard to leave the Nvidia ecosystem, which includes chips as well as tools for design, operations, and finance. What's more, the company's execution on its next-generation chips, Rubin Ultra and Feynman, is "well under way," Schneider adds.
"There's no competitor, they're No. 1, and they don't lose any of their competitive advantage," says Gunderson.
Nvidia, the chip maker, will be fine. Investors will still need to grapple with Nvidia the bank, though. Huang's former company sits at the center of a dizzyingly complex web designed to finance the trillion-dollar AI data-center buildout. Nvidia's commitments total some $200 billion, before its equity investments in other firms.
Today's data centers are financed in all kinds of ways, including equity issuance, bond issuance, private equity, loan facilities backed by the value of chips, and off-balance-sheet vehicles secured by the safety of hyperscaler balance sheets. Nvidia itself has often stepped in with equity and credit guarantees.
Those financing fears were plaguing the AI industry before the Huang crisis.
Take neocloud AI-as-a-service provider CoreWeave. It buys Nvidia chips; Nvidia provides credit guarantees helping CoreWeave get credit to build, and Nvidia owns roughly 13% of CoreWeave stock. Nvidia is CoreWeave's supplier, banker, and owner.
Coming into the week, CoreWeave stock was down 66% from its 52-week high as its bond yields soared to 15% in October.
Ultimately, though, Nvidia is a relatively small part of the finance behemoth. And Nvidia's next CEO will need to sell chips, just like Huang did.
Demand for AI services remains strong -- stronger than anyone expected just a few months ago. Third-quarter revenue for Anthropic, the soon-to-be-public AI lab, was almost $17 billion, up more than 1,100% year over year. A company that started 2025 with a business smaller than Yeti Holdings is now roughly the size of Oracle.
CoreWeave, for its part, said on its recent third-quarter earnings calls that older chips were holding their value better than expected.
AI skeptics are still raising important questions, including whether all of the spending on AI computing will deliver profits, while lowering costs for the economy writ large. Oaktree's Howard Marks penned a memo on Wednesday, acknowledging the inherent uncertainty in AI, a technology he called the "most consequential" in a generation, adding that investors can't simply sit out the AI trade because of uncertainty. What investors need to do is build in an appropriate margin of safety.
What is that margin? We won't argue that Nvidia is going back to 30 times earnings, its P/E ratio just one year ago. But a P/E of 12 -- a 50% discount to the market multiple -- more than accounts for the substantial risks surrounding AI.
In downgrading Nvidia shares this week and slashing his price target to $200 from $500, Baird's Gerra didn't focus on Huang's troubles. He's looking at AI spending and fears that data-center spending could slow to 40% in 2027.
The current market outlook is closer to 60%, given capital expenditure plans from Meta Platforms, Alphabet, Microsoft, Amazon.com, Oracle, CoreWeave, and SpaceX. Those seven companies alone are expected to spend roughly $900 billion in 2026, almost double their 2025 levels. Spending in 2027 is expected to hit $1.5 trillion, up about 60%. Gerra's call implies spending of closer to $1.3 trillion.
Lower spending could translate into a $50 billion to $100 billion revenue hole for Nvidia. That would push 2027 revenue down to $600 billion, still up roughly 50% from 2026. There is a margin of safety. In other words, AI disappointment would still equate to huge Nvidia growth.
If that analysis doesn't offer enough comfort, investors have plenty of other AI options. Black likes Broadcom, which designs custom AI chips for Alphabet and others. Its shares trade at 17 times estimated 2027 earnings, and could see rising investor interest if dollars leave Nvidia.
Gunderson, who still likes Nvidia, recommends holding Broadcom and chip designer Advanced Micro Devices, along with the dominant maker of chips, Taiwan Semiconductor Manufacturing, and the dominant maker of the machines that make the chips, ASML Holding. TSMC trades for about 17 times earnings. ASML trades for about 24 times earnings. AMD is the richest of the bunch, trading at about 29 times earnings. All four stocks, like Nvidia, are cheaper than they were a year ago.
"If there is disruption at Nvidia, there is so much need out there that AMD and Broadcom will continue to flourish," says Christopher Shaffer, managing partner at Talaria Capital Management.
Chip companies, including Nvidia, remain good stocks, even amid the specter of reduced hyperscalers' spending. Huang's removal isn't the Jenga block that topples the tower. In fact, his pioneering GPUs remain the solid foundation.
At Barron's, to be sure, we'll need to do some self-reflection. We wrote bullishly on Nvidia stock when it was trading at $226. The stock was cheap then. It's cheaper now.
We also regularly listed Huang on our list of Top CEOs. The innovation was impossible to ignore -- as were the 450% gains over the past five years and nearly 10,000% over the past 10. But we should have spent more time on governance and the company's lack of preparation for Huang's eventual succession.
"The more indispensable your CEO is, the harder the board has to work to make the person dispensable," says Columbia Business School professor Shivaram Rajgopal.
Huang needed to be removed. And the fallout isn't over. Nvidia's board won't escape criticism.
Nvidia is "going to need to bring in directors with real, true credibility, both with regulators and markets, to steer the organization through whatever comes next," says Santa Clara University associate professor Jo-Ellen Pozner. "I hope it's a tipping point. It's honestly time for Silicon Valley to grow up. [Its] attitude of move fast and break things has been too broadly applied."
It's a necessary wake-up call. For Nvidia shares, it's also a buying opportunity.
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