We try very hard not to get pulled into commenting headline by headline about breaking news. And this week was an extreme example, given founder and CEO Jensen Huang leaving Nvidia after various revelations, only some of which were business-related.
Here are five broader and overlooked points now that the distributed denial-of-service attack on your attention is subsiding:
- The Central Bank of Nvidia will withdraw stimulus.
- Nvidia's prospects change less than people think,
- More revelations ahead in specific areas.
- The semiconductor cycle was already turning.
- The political bubble behind it all.
Let's dive in:
- Nvidia will be a less aggressive bank. We often call Nvidia the "central bank of AI" in that it is both a buffer and a facilitator of capital and leverage in the broader (AI) economy. As we have documented endlessly, it takes that role seriously, using its balance sheet to buttress GPU financing, credit to neoclouds, and equity capital to frontier AI companies. All of this gets leveraged repeatedly in the market, making an Nvidia dollar much more consequential, which also works in reverse, now that a more financially minded and risk-sensitive (interim) CEO is in place.
- Nvidia's prospects change less than people think. While Huang was a force of nature, and he drove Nvidia single-mindedly and without a clear successor, the semiconductor industry is unusual. It has very long design/test/build cycles, so years of product are already in the works. His absence won't stop that, nor will it be felt anywhere near as palpably as some starry-eyed tech types already argue.
- More revelations will come as the board and interim CEO clean up. One predictable byproduct of such episodes, given the change at the top, and given the risk of more shareholder suits, is a forensic attempt to find anything worth disclosing and disclosing it. We expect more news about product leakage to China, more about circular financing, and more about balance sheet risks. And, yes, likely more about his personal dalliances, which matter less to the business with him gone.