NVIDIA's stock price is under increasing pressure as the board of directors is deliberating on Jensen Huang's future, amidst ongoing disputes regarding his leadership.
Analysts warn that if Jensen Huang leaves and the company does not have a credible successor, NVDA could lose another 20% to 30% of its market value.
Cases of former CEOs leaving companies such as Intel, McDonald's, and Wynn Resorts in the past indicate that leadership uncertainty could lead to further declines; however, the case of Steve Jobs at Apple resulted in a different outcome.
If CEO Jensen Huang leaves the company, NVIDIA's stock price could fall another 20%. Reports of potential leadership changes are unsettling to investors and put further pressure on the stock price, which is already weak due to controversies. Analysts warn that if Jensen Huang leaves and there is no clear successor, the stock price could drop to $128. As NVIDIA's financial report for November 17 approaches, investors must consider to what extent the company's valuation relies on his leadership.
Why is Jensen Huang's position under threat?
The uncertainty surrounding Jensen Huang has further intensified following the emergence of related reports. The reports indicate that NVIDIA's board of directors is considering his future due to allegations involving personal relationships, including one businesswoman who is said to be under investigation by U.S. intelligence agencies for suspected involvement in chip shipments to China.
NVIDIA previously stated that the board of directors had confidence in Jensen Huang and initiated an internal investigation with external legal support. However, subsequent reports indicated that the directors were discussing whether he should continue to serve as CEO.
NVIDIA's articles of association allow the majority of the 11 directors to remove the CEO. As of November 12, no final dismissal or resignation has been confirmed yet. The board's decision now poses a significant governance challenge to the company, which Jensen Huang has led since its co-founding in 1993.
Without Jensen Huang, would NVIDIA's stock price fall another 20%?
Market concerns reflect Jensen Huang's central role in NVIDIA's transformation into a global leading AI chip supplier. He has shaped the company's product strategy, customer relationships, and its expansion into the AI computing field.
Therefore, changes in leadership may lead to more than just short-term, emotional selling. If investors believe that the successor will not be able to maintain the company's pace of innovation and execution, they may re-evaluate NVIDIA's valuation.
Past leadership crises have shown that the damage can exceed the initial market reaction.
Wynn Resorts initially rebounded after its founder Steve Wynn resigned in 2018, but a year later, the stock price was still 19.5% lower.
These cases indicate that succession planning can affect investor confidence, but the broader business environment also influences these returns.
NVIDIA Stock Analysis: Will NVDA fall to $128?
NVIDIA's stock price closed at $173.73 on November 11, and then fell to $160.18 in after-hours trading. If it were to fall another 20% from $160.18, the stock price would be around $128.14. A 25% pullback would bring it close to $120; a 30% decline would bring it close to $112.
From a technical perspective, the range of $158 to $160 is the area that needs attention at present, with $150 being the next downside reference point. If prices continue to fall below these levels, the bearish outlook may further strengthen. On the upside, $175 to $180 represents the first resistance level for a rebound, while $200 to $205 constitutes an even more important resistance zone.
