AI summary
Summary of article:
After Huang Renxun was involved in the controversy, Huida’s stock price fell. Wall Street was worried about whether this spirit shape would last and whether the AI craze would cool down. Although valuations have declined significantly, the outlook is still full of uncertainty.
Huida (NVIDIA CEOJen-Hsun Huang After the extramarital affair incident was revealed, the company’s stock price fell nearly 10% for two consecutive trading days, reaching its lowest level since March 30. Wall Street is wondering whether the world’s largest and most important AI chip maker can keep its soulmate Jensen Huang intact.
Seaport Global Securities’ Jay Goldberg, the only analyst with a sell rating on Huida, said, “If Jensen Huang leaves, the reason for the bullishness disappears. It seems impossible to imagine Huida without Jensen Huang. If he is replaced, the share price will lose support. I don’t know how likely that is, but it would be devastating.”
Huida’s share price was already under pressure before the crisis, as market doubts grew about how long the AI craze could last and whether the hundreds of billions of dollars in capital spending supporting it could be sustained. In last cycle’s midterm elections, candidates opposing data centers won in key states like Texas, raising market concerns.
Simeon Wallis, chief investment officer at Aprio Wealth Management, which holds shares in Huida, said the market’s view on the cost of AI manufacturing had changed long before the midterm elections. The election further increased the uncertainty. We now have to wait for follow-up actions from HUIDA’s board of directors, making the outlook even more uncertain.
He said it was too early to tell whether the situation had fundamentally changed, “but it’s hard to have too much confidence in the short term.”
For investors, the selloff sent Huida shares to multi-year lows. The current stock price is equal to less than 12 times the estimated earnings per share for the next 12 months, and the estimated price-to-earnings ratio is the lowest since 2013; The relative valuation of the S&P 500 index also fell to its lowest level since 2002.
Huida’s PEG ratio, which is the price-to-earnings ratio divided by the profit growth rate, has fallen to a historic low of 0.162. However, Goldberg reminded that there is a lot of uncertainty about whether Huang Renxun will stay or leave, and it is difficult to assess Huida’s fair value now. The situation may get worse before it gets better.
Analysts have not yet adjusted Huida’s revenue and profit estimates for fiscal years 2027 and 2028, but they may be updated after the company releases its third-quarter financial report on Nov. 17. Market estimates indicate Huida’s net profit and revenue will increase more than 90% in the third quarter and the current fiscal year ending Jan. 31.
Fast growth and a low price-to-earnings ratio are the main reasons why Wall Street is almost unanimously optimistic about Huida. 78 of 82 analysts tracked by Bloomberg have given it a buy rating with an average target price of $320, meaning there is still room for more than 90% upside over the next 12 months.
Daniel Newman, CEO of Futurum Group, said: “The optimistic view is that this matter is limited to personal misconduct. If the investigation confirms that he has no other inappropriate behavior, the stock price should bounce back. The problem is that we don’t know yet.” He said he is optimistic about the prospects of AI, but is still waiting to see Huida. He believes that many people feel the same way: This wave of sales has brought many opportunities for entry, but until the situation becomes clearer, they may choose stocks other than Huida first.
Summary FAQ
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After the news came out, Huida’s share price fell nearly 10% for two consecutive trading days and reached the lowest level since March 30, indicating that the market has obvious doubts about the stability of the company’s leadership and future growth momentum.
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Jay Goldberg of Seaport Global Securities pointed out that it is almost unimaginable for the market to imagine Huida without Huang Renxun; If they are replaced, the reasons why investors are optimistic about the company will largely disappear, and the share price may even lose key support.
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Huida’s price-to-earnings ratio has fallen to its lowest level since 2013, and PEG has also hit a record low. However, the market is still concerned about whether AI capital spending can be sustained and what the impact of the board’s follow-up actions will be. Short-term confidence is still insufficient.
