Nvidia Shares Plunge 9% After-Hours on Report Board Is Preparing for CEO Huang's Departure; Wall Street Still Sees a Buying Opportunity — BigGo Finance

Nvidia's shares experienced a significant decline of 9% in after-hours trading on November 11, following a report indicating that the company's board of directors is preparing for the potential removal of CEO Jensen Huang. According to the Wall Street Journal, the stock dropped to around $158 in after-hours trading, down from a closing price of $173.73 during the regular session. Although the shares have since recovered slightly, they are still hovering around $160.

Prior to the report, Nvidia's stock had risen by 2.87% on November 10, making the post-market decline unexpected for investors. The catalyst for this downturn was the revelation of Huang's extramarital affair, which has led to an internal investigation by the board. Over the two trading days preceding the after-hours drop, Nvidia's stock had already fallen by 9.5%, and the recent decline has exacerbated this trend, bringing the stock price approximately 30% below its all-time closing high of $239.24, recorded on October 6.

Market analysts are weighing the implications of a potential leadership change. Dan Ives from Wedbush Securities estimated that Nvidia's enterprise value could decline by 25% to 30% in the absence of Huang. Similarly, Gil Luria from D.A. Davidson pointed out that without a succession plan, an immediate removal of Huang may not be feasible.

Interestingly, the cryptocurrency market appeared to react to Huang's situation even before the traditional stock market opened. On November 9, futures linked to Nvidia on the Hyperliquid exchange fell, indicating a shift in investor sentiment prior to the stock's movement. The full impact of these events on Nvidia's stock will likely become clearer during regular trading hours, which start at 11:30 p.m. Japan time on November 12 (9:30 a.m. EST on the same day). If the board's decision is announced, it may lead to further fluctuations in the stock price. The company is also set to release its quarterly earnings report on November 17, which will draw attention to both its management situation and financial performance.

Despite the recent selloff, many analysts on Wall Street view the dip as a potential buying opportunity. A survey conducted by Bloomberg revealed that out of 82 analysts, 78 maintain "buy" ratings for Nvidia, with an average price target set at $320, suggesting a potential upside of over 90% within the next year.

The decline in Nvidia's stock began before the news of Huang's scandal, driven by concerns regarding the return on investment in artificial intelligence (AI) capital spending and anticipated delays in data center construction following the U.S. midterm elections. As a result, the stock has fallen 29% from its peak on October 6 and has suffered six consecutive weeks of losses, marking the longest such streak since 2012.

This correction has led to a significant decrease in Nvidia's valuation. The forward 12-month price-to-earnings ratio has dipped below 12, the lowest level since 2013, and its relative valuation compared to the S&P 500 index has not been this low since 2002. Analysts predict that Nvidia's revenue and profit for the third quarter and fiscal year 2027 will each increase by more than 90%, indicating that the fundamentals of the company remain solid.

Daniel Newman, CEO of Futurum Group, believes that Nvidia's strong pricing power, influence in the AI supply chain, and robust profitability make it an attractive option even during market downturns. He noted that if the investigation regarding Huang's behavior does not reveal additional issues, the stock could stabilize. However, he also mentioned that investors might consider alternative investments until more clarity is achieved.

Not all analysts share an optimistic outlook. Jay Goldberg from Seaport Global Securities, the only analyst to assign a "sell" rating to Nvidia, expressed skepticism about the company's future without Huang, suggesting that the stock would likely plummet if he were to step down. While the likelihood of such an event is uncertain, Goldberg warned that the impact would be substantial if it were to occur.

Looking ahead, the focus will remain on the findings of the board's investigation and any decisions regarding Huang's position. If there is continued ambiguity surrounding his status, the volatility of Nvidia's stock, which has been a leader in the AI sector, is expected to persist. The upcoming earnings announcement on November 17 will be critical in assessing whether the company can provide results and guidance sufficient to alleviate concerns about its management structure.