Nvidia’s Leadership Change:
What We’re Watching
Jensen Huang has resigned as CEO of Nvidia, effective immediately. His departure follows several days of reports about his personal conduct and a board investigation into whether he was targeted by a foreign intelligence effort. CFO Colette Kress will serve as interim CEO while the board searches for a permanent replacement.
We put a lot of weight on management when we evaluate a company. Huang built Nvidia over 33 years, so this is significant news, and it’s understandable if investors find it unsettling.
Founders have left great companies before.
History offers some useful perspective:
- Apple: When Steve Jobs stepped down as CEO in August 2011, Apple’s stock (including dividends) was up 77% one year later, 98% after three years and almost 120% after five. Apple is now worth more than ten times what it was when Tim Cook took over.
- Alphabet: When Google’s founders, Larry Page and Sergey Brin, stepped back in December 2019, Alphabet stock rose 41%, 55% and 165% over the same periods under Sundar Pichai.
- Microsoft: This is the fair counterpoint. Bill Gates handed over the CEO role in January 2000, near the peak of the tech bubble. The stock was still down about 45% five years later, even though the business kept growing. It took time, and eventually Satya Nadella’s leadership, for the stock to flourish.
In our view, the lesson is that a founder’s exit rarely breaks a healthy company, but the price paid for the stock and the quality of the next leader still matter.
What this means for Nvidia
Nothing in the announcement points to weaker demand for Nvidia’s chips, which remain the standard for building AI systems. The business is still intact.
We are not making any immediate changes to Nvidia in client portfolios. We’ll be watching two things closely: Nvidia’s earnings report on November 17 and the board’s choice of a permanent CEO. The leadership change may affect our view of how much weight Nvidia should carry in portfolios, and in some cases adjustments may be warranted. Any decisions will come after the earnings report, not before.
Losing Jensen Huang is a real blow. Still, we would rather act on facts than headlines.
If you have questions about how news like this affects your own plan, we’re always happy to talk.
Sources: AP News, Yahoo Finance, Financial Modeling Prep
Biondo Investment Advisors, LLC is a registered investment adviser. Neither the information nor the opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. Past performance does not guarantee future results.
Nvidia’s Leadership Change
Biondo Investment Advisors
Nvidia’s Leadership Change:
What We’re Watching
Jensen Huang has resigned as CEO of Nvidia, effective immediately. His departure follows several days of reports about his personal conduct and a board investigation into whether he was targeted by a foreign intelligence effort. CFO Colette Kress will serve as interim CEO while the board searches for a permanent replacement.
We put a lot of weight on management when we evaluate a company. Huang built Nvidia over 33 years, so this is significant news, and it’s understandable if investors find it unsettling.
Founders have left great companies before.
History offers some useful perspective:
In our view, the lesson is that a founder’s exit rarely breaks a healthy company, but the price paid for the stock and the quality of the next leader still matter.
What this means for Nvidia
Nothing in the announcement points to weaker demand for Nvidia’s chips, which remain the standard for building AI systems. The business is still intact.
We are not making any immediate changes to Nvidia in client portfolios. We’ll be watching two things closely: Nvidia’s earnings report on November 17 and the board’s choice of a permanent CEO. The leadership change may affect our view of how much weight Nvidia should carry in portfolios, and in some cases adjustments may be warranted. Any decisions will come after the earnings report, not before.
Losing Jensen Huang is a real blow. Still, we would rather act on facts than headlines.
If you have questions about how news like this affects your own plan, we’re always happy to talk.
Sources: AP News, Yahoo Finance, Financial Modeling Prep
Biondo Investment Advisors, LLC is a registered investment adviser. Neither the information nor the opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. Past performance does not guarantee future results.