Nvidia Stock After the CEO Probe: Buy, Hold or Wait? (NVDA)

Why Nvidia stock closed down

0:00 Nvidia stock closed down 4.27% on Monday, November 9th, because its board opened an investigation into CEO Jensen Huang. And then on Tuesday, it fell another 5.47%, which leaves the biggest chip company in the world about 29% below its October 6th record close. But here's the strange part. Wall Street's average price target is still about $326, which is more than 90% above Tuesday's close, and 59 of 62 analysts still rate it a buy. So either analysts are asleep at the wheel or the market is panicking about the wrong thing.

0:29 By the end of this video, you will know which one I think it is. My name is Blake. I dig up stocks before the bull stampede, so you're not buying at the top like Wojak. Before we go any further, I own Nvidia stock, so keep that in mind when you're watching this video.

What actually happened: the board investigation

0:48 So what actually happened? Allow me to explain I'm going to stick to what's been reported and confirmed because there's a lot of noise out there right now. Back on October 29th, The New York Times reported that US intelligence believed a woman with a close relationship to Huang, a former leader at a company called Megaspede, which buys Nvidia chips, may have been passing information to Beijing. Then, on Sunday, Huang sent an email to the video employees admitting the affair.

1:09 He wrote, "I was unfaithful to my wife, my actions hurt her and our children. There is no excuse for what I did. I am deeply sorry." The same day, NVIDIA's board said a committee of independent directors with outside lawyers will run an investigation, and it said it has "no reason to believe that I have our national security or NVIDIA secrets were compromised." Then on Tuesday, those independent directors hired the law firm Watchall Lipton with June Kim, a former acting US attorney in New York, leading the review, which NBC News says signals the board doesn't intend this to be a rubber stamp.

1:39 The affair is between him and his family. The question for us is, where this is a business problem?

Washington and Trump

1:45 And Washington is already involved. President Trump said Monday the weighing quote had absolutely no idea the person in question was a spy added quote I really believe him and said he wants weighing to stay as CEO and rumors reported that he also said quote I know the FBI is looking into it and quote I think that he'll be in good shape The New York Times also reported that Trump was told back in May that intelligence agencies had linked Huang to a person believed to be working for Chinese intelligence,

2:13 Though Trump said Monday he didn't recall that. On top of that, three House Republican committee chairs have asked Wing for a closed-door briefing on November 18th. Senator John Cornyn called for a congressional oversight investigation, and Democrats like Senators Richard Blumenthal and Chris Coons are now calling for investigations of their own. Wojak saw the headline and sold before he got to the second paragraph. So why would a personal scandal move a stock this big?

2:39 Well, Nvidia was worth about 4.5 trillion going into Monday, which is roughly 7% of the entire S&P 500, so a drop of a little over 4% wipes out close to $200 billion in a single day. And this wasn't a quiet sell-off, more than 420 million shares traded hands on Tuesday, over triple a normal day.

Key person risk: what Huang is worth to Nvidia

2:55 And the reason investors care is something called key person risk, which basically just means a company depends so much on one person that losing that person would actually hurt the business. NVIDIA might be the biggest example of that on the planet. According to Bloomberg NVIDIA has no publicly named successor to Huang and no formal succession plan. And Bernstein points out that 60 executives report directly to him. 60 direct reports. That's not an org chart.

3:17 That's a group chat. Now analysts don't think he's going anywhere right now. Patrick Moorehead and Matt Bryson both said Huang is unlikely to be pushed out unless the investigation actually finds something. And analysts Dan Ayves called a CEO change unlikely in the near term. Though he said that depends on what the review finds, which he thinks could take 4-6 weeks. And he also said in video it would be worth 25-30% less without Huang. And Gene Munster of Deepwater Asset Management says the stock is now pricing in roughly a 25% chance that Huang leaves when he put it closer to 10-15%.

3:50 But Yale's Jeffrey Sonnenfeld calls Huang's odds of staying a coin flip. But Bryson also made a point that I think matters more, which is that this could weaken Huang's credibility when he's making the case for AI policy with US officials. And for Nvidia, policy is a huge deal because export rules decide who it's even allowed to sell to. And on Monday, the information reported that the Trump administration may now allow new restrictions on exports of Nvidia's advanced AI chips to China, possibly through the annual defense bill, which basically just means the rules could get tighter and still looser.

4:18 So the real risk here isn't the affair itself. It's actually Washington.

China, Megaspeed and the short seller

4:23 And that brings us to China. The short seller, Culper Research, which disclosed a short position back in May, alleged that over 20% of NVIDIA's fiscal 2026 data center and computing revenue was tied to China through Southeast Asia, and it specifically flagged megaspede. Megaspede denies any wrongdoing, and NVIDIA says its own audits found no export violations. So remember, that's an allegation from someone who makes money if the stock falls. And you should weigh it that way.

4:45 But on Monday, the New York Times added a new wrinkle, reporting that a Commerce Department investigation into ever megaspede smuggled NVIDIA chips into China stalled and was handed to the Justice Department after NVIDIA's top lawyer contacted investigators. And NBC News reported that the Justice Department is now running a criminal investigation into Megaspede with help from the FBI. Though Nvidia says it talks to officials to answer their questions and get their guidance.

5:08 And calmer says it handled the case by the book and then on Tuesday the information went further reporting based on two people who know her that Huang's relationship with her helped Chinese companies get at least 7.5 billion worth of video chips, about 240,000 of them. So Ruder said it couldn't verify the report and neither Nvidia nor US agencies have confirmed it. For comparison, Bernstein says China, including Hong Kong, was 8% of the video's revenue last quarter.

5:32 And cities at Tf Malik estimates that H200 chips reaching China through middlemen are under 1% of data center sales. two very different numbers and the board's investigation is how we find out which number the truth is closer to.

Nvidia was already down before the investigation

5:45 Now let's talk about the part most people are going to skip, which is that this didn't hit a healthy looking stock. As of Monday's close, a video was down about 21% over the past month, and most of that happened before anyone had heard about this investigation. On Thursday, November 5th, NVIDIA felt 9.26 percent in a single day when investors started worrying that a Democratic Congress could slow down data center construction after the midterms. And on Monday, there was one more headline piling on because Alphabet announced new AI chips, which is a reminder that NVIDIA's biggest customers are also trying to build their own.

6:17 And on Tuesday, one video fell, Broadcom rose about 4% and AMD rose too. So money didn't leave AI, it just moved down the street. So Wojak isn't selling one bad headline. He's selling three of them all at once.

Is Nvidia stock cheap now? (16.6x earnings)

6:29 So is Nvidia stock cheap now? Well, at last Thursday's close of about $181, Nvidia traded at about 16.6 times next year's expected earnings, according to FinanceFeeds. So after this week's drop, it's lower than that. A Ford P, if you didn't already know, basically just means the price divided by what analysts expect the company to earn per share over the next year. So a lower number means you're paying less for each dollar of expected profit. but a low multiple only helps you if those earnings actually show up.

6:56 And we find out on November 17, when NVIDIA reports, the company got in for about $108 billion of revenue, plus or minus 2%, and analysts expect around $2.47 of adjusted earnings per share. that report is the real verdict. not the board, not Congress, the numbers. Now here's the caveat and I want to be extra honest on this one because I own a video stock. Nobody outside that investigation knows what it's going to find. And if it turned out something worse, like actual company secrets being shared, this will be a very different story, and I would tell you that.

7:25 And there's already a lawsuit because on Monday, shareholders filed a proposed class action in a California federal court, announced by the Rosen law firm, which basically just means one lawsuit filed on behalf of a whole group of shareholders, and it alleges that NVIDIA and Huang misled investors by not disclosing his ties to the woman at the center of this, which is only an allegation at this point. Also, most of those price targets were set before this news, so I'd expect some of them to come down.

7:48 That's already starting to happen because Mizuhu cut its target from $315 to $250 while keeping its outperform rating, which basically just means it still expects the stock to beat the market, and on Tuesday's city cut its target from $315 to $285, and whilst Fargo cut from $315 to $300, both keeping their ratings. Birdstein kept its positive rating and its $400 target, but that's just one firm.

What I'm doing with my Nvidia shares

8:10 So what am I doing? I'm holding my video shares for now, and I'm considering buying more, because what moves this stock long term is orders and margins, and so far nothing in the story has touched everyone. But I'm watching three things going forward. First, whoever the board's investigation finds anything beyond the affair. Second, over Huang is still welcome in Washington, including that November 18th briefing House Republicans asked for it, and that possible shins in trip next week that President Trump mentioned.

8:34 Because that tells you whoever he still has influence, and third, November 17th, the earnings. And if you're thinking about buying the same rules always applies. Size it so that a 9% day, like last Thursday, doesn't change your mood. Doesn't impact your sleep. You should still be able to sleep soundly. So is this a buying opportunity or the start of a larger sell-off? Tell me what you think in the comments, I always appreciate the juicy discussion.

8:57 At the time I recorded this, I owned Nvidia stock, heck, I might even buy more Nvidia stock, and this is not financial advice. YouTube, pick this next video for you and unlike Nvidia, it has a backup plan.