Nvidia’s deepening personal scandal could wipe as much as $250bn from the world’s most valuable artificial intelligence company, but opportunistic investors may view the selloff as a rare chance to buy into the chipmaker at a substantial discount, according to Nigel Green, chief executive of deVere Group.
Nvidia shares fell about 5 per cent ahead of the US market open after the company’s board launched an independent investigation into reports that chief executive Jensen Huang had been targeted by a foreign intelligence operation.
The inquiry has added fresh uncertainty to a stock already battered by concerns over technology valuations, regulation and the sustainability of the AI investment boom.
Green argues that investors risk confusing a personal controversy with a deterioration in Nvidia’s underlying business.
“This is, for now at least, a personal scandal, and the market is pricing it like a corporate crisis,” he says.
“A fall of this size is likely to knock somewhere between $200bn and $250bn off Nvidia’s value, yet nothing about this weekend’s news changes how many chips it sells or how badly the world needs them.”
Huang has acknowledged the affair in a memo to employees. Nvidia’s board has said it has no reason to believe national security or company secrets were compromised, while emphasising that its investigation will examine all available information.
The distinction is critical for investors attempting to establish whether the latest selloff represents a temporary reputational shock or the beginning of a more serious crisis at the heart of the AI industry.
“The board’s position matters enormously here,” Green says. “If the investigation backs it up, the market is likely to move on quickly, and the discount on offer today will start to look like a gift.”
He adds: “Investors buy dips like this when the fundamentals haven’t moved. Here, they haven’t.”
But Nvidia’s troubles pre-date the latest headlines. Its shares had already fallen about 25 per cent from their October 6 peak, wiping roughly $1.4tn from its market value despite continuing revenue growth.
A brutal technology selloff had previously erased nearly $450bn from the company’s valuation in a single session, as investors reassessed the scale of spending on AI infrastructure and weighed mounting regulatory concerns.
The decline has brought Nvidia’s forward price-to-earnings multiple down to about 13 times on some measures, a level that Green believes looks increasingly attractive given the company’s growth prospects.
“Nvidia was already a quarter off its high before any of this broke,” he says. “Put a scandal on top and you get a valuation that looks remarkably cheap for a company still growing at this pace.”
“The pullback we’ve seen since October was driven by worries about AI spending and regulation. The affair adds a layer of noise on top, and noise is what creates opportunity.”
The next major test comes on November 17, when Nvidia is scheduled to report its latest earnings. The figures could prove more influential than the headlines if they demonstrate that demand for its processors remains resilient.
“The results are likely to matter far more than anything in the tabloids,” Green says. “If demand for its chips stays as strong as we believe it will, attention is likely to swing straight back to earnings.”
Yet the investment case is not without significant risks. Huang remains the central figure in Nvidia’s extraordinary rise, and the company has no obvious successor waiting in the wings. Any development that threatens his position could unsettle investors far more than the immediate reputational damage.
Washington is also expected to intensify scrutiny of Nvidia’s business dealings with China, creating another potential source of regulatory and geopolitical pressure.
“If the probe finds anything more serious, the selloff could deepen, so investors need to weigh these risks carefully,” Green cautions.
Huang has received public support from the White House, with President Donald Trump describing him as a “fine person”. That endorsement, however, does little to resolve the questions surrounding the board’s investigation or the potential implications for the company.
Green remains convinced that Nvidia’s long-term prospects will outlast the current controversy.
“The world’s appetite for computing power is likely to keep climbing for years. Data centres will keep being built, and the chips inside them still have to come from somewhere,” he says.
For investors, the temptation is to treat the latest plunge as an opportunity to acquire a dominant player in the AI revolution at a lower price. But whether the selloff proves a bargain or a warning will depend on what the investigation uncovers — and whether Nvidia’s next earnings report can restore confidence in the company’s extraordinary growth story.
Leave a Comment