Kobeissi Letter: Nvidia Falls 7% as the Jensen Huang Controversy Weighs on the Stock
On the Nvidia situation: Nvidia, $NVDA, is now down another -7% today and -12% since the Jensen Huang affair situation began. At this point, the market is pricing in two major potential headwinds. First, the growing possibility that Jensen Huang will be removed as CEO. Second, possibility that sensitive Nvidia technology or information was compromised. Are these scenarios possible? Sure, but we believe both remain unlikely, with less than a 20% probability. Nvidia's stock is now down -32% in just 24 trading days, erasing -$1.8 trillion in market cap, with over one-third of these losses coinciding with the Jensen Huang controversy. We believe Huang remains an integral part of Nvidia's future and the broader AI Revolution, and this week's events will not derail the broader thesis. As the dust settles and uncertainty begins to fade, we expect bargain hunters to step in. The fundamental AI investment thesis remains intact.
Context
Investors are now pricing leadership and security risk into the company that supplies most of the chips behind the AI boom.
On Nov 9, reports citing Reuters said Nvidia and Jensen Huang were sued over alleged hidden spy ties, and posts said US lawmakers wanted Huang to answer questions while China denied the claims. The allegations had not been proven at the time of this post.
Deep dive
The Kobeissi Letter posted that Nvidia stock was down another 7% on Nov 10 and 12% since what it called the Jensen Huang affair began.
In its view, the market is pricing in two possible headwinds: that Jensen Huang could be removed as CEO, and that sensitive Nvidia technology or information could have been compromised. The Kobeissi Letter wrote that both scenarios are possible but unlikely, putting each at less than a 20% probability.
The post also says Nvidia stock is down 32% in 24 trading days, erasing $1.8 trillion in market value, with over a third of those losses coinciding with the controversy. It argues that Huang remains central to Nvidia's future and that the fundamental AI investment thesis remains intact.
The probabilities and the outlook are the account's own opinion. Another widely shared post, from the account amitisinvesting, tied the drop to a report from The Information about a network linked to Alice Huang. The underlying allegations remain unproven.
What to expect next
Watch for any statement from Nvidia's board or from Jensen Huang, the progress of the lawsuit, and any formal request from US lawmakers. Further reporting could move the stock in either direction, and analysts will be watching whether the controversy affects Nvidia's sales in China or its relationships with large customers. The next earnings report will also give the company a public moment to address investor concerns directly.