AI summary
Summary of article:
The market is worried that if Huang Renxun leaves Huida, although the AI chip business is still strong, the company may be revalued due to valuation, governance and succession issues.
NoJen-Hsun Huang What will Nvidia Huida (also known as NVIDIA) look like?wall Street I began to worry that even though the AI chip business is still strong, the company may lose an important reason why investors are willing to give a high valuation: they believe Huang Renxun can lead Huida and show the way for the AI industry.
After the news that Huida’s board of directors is preparing to replace Huang Renxun, Huida’s stock price fell by 10% after the New York market closed on the 11th. If normal trading hours continue to decline, the market cap will fall below $4 trillion. The market is reevaluating how much Huida is worth without its founder.
Changing CEO affects the entire company
David Mayer, a senior investment analyst at The Motley Fool, an investment research institute, said Huang Renxun is a key figure at Huida, and the company’s organizational structure was designed with him as the chief decision maker. If the risk of his removal increases, it will have a significant impact on the company and the Board should immediately inform shareholders.
Haris Khurshid, chief investment officer of Karobar Capital, believes that the strategies and relationships between Huang Renxun and Huida are interconnected. What the market must now reevaluate goes beyond the scandal, including corporate governance and the risks of excessive dependence on a single leader.
Joe Gilbert, portfolio manager of Integrity Asset Management, said that Huang Renxun is not only a representative figure of AI, but also a designer of AI infrastructure. HUIDA must introduce a new company representative, and the successor must prove that he or she is qualified; Nevertheless, Huang’s approach would be extremely difficult, if not impossible, to imitate.
Good profits can’t support high valuations
Charu Chanana, chief investment strategist of Saxo Markets, bluntly said that part of the premium received by Huida’s share price comes from investors’ confidence in Huang Renxun’s ability to set the direction for the AI industry.
There is now uncertainty over who might continue his vision and how Huida’s China strategy will proceed. Even if profits remain strong, these doubts could impact the valuation the market is willing to give to Huida, he said. Strong demand may reassure investors, but it may not completely remove leadership uncertainty.
Wall Street’s attitude has begun to change. After Baird downgraded Huida to neutral and Morgan Stanley removed it from its Top Picks list, Bernstein also cut its rating from Outperform to Market In line, and halved its target price to US$200 from US$400.
Bernstein analysts, including Stacey Rusgon, said they understand the logic of buying on dips, but are worried there are still more questions to come and would prefer to remain on the sidelines.
Can Jen-Sun Huang step aside?
Michael O’Rourke, chief market strategist at JonesTrading, said the situation facing the successor would be very difficult. Huang Jen-hsun previously forecast revenue would grow 70% this year, but given Huida’s customer financing and aggressive business methods, he expects his successor may be busy putting out fires and cleaning up messes next year.
Some analysts also proposed another path: Huang Renxun stepped down as CEO and continued to participate in strategy.
Brian Mulberry, chief market strategist of Zacks Investment Management Company, believes that Huang Renxun’s strategic vision is still very important for Huida’s subsequent innovation, research and development and execution. He may be disciplined and will no longer serve as CEO but will remain with the company as a director or strategic advisor.
