It doesn’t matter which press you read this morning, it’s full of stories about Jensen Huang’s indiscretions and now his exit from NVIDIA. If only it were another simple case of billionaires behaving badly, such as Richard White and Chris Ellison. But NVIDIA is a very different beast; as well as being a US$4 trillion behemoth and, at one stage last month, the world’s largest listed company, it sits at the absolute centre of the global AI trade, which makes Jensen Huang being forced out a much bigger issue than a normal change of CEO. The numbers tell the story:
- NVIDIA’s revenue has surged from US$29.7bn in FY22 to US$303bn in FY26, more than a tenfold increase in four years, driven by insatiable demand for its GPUs from hyperscalers, cloud providers and AI labs building out their AI infrastructure.
Its Data Centre division alone generated US$193.7bn in FY26, with 83% trailing revenue growth and an incredible 80–85% share of the global AI GPU market. Not surprisingly, NVIDIA has become the single most important equity expression of the AI investment boom. But that dominance also creates a potential vulnerability: Huang has been the driving force behind the company’s transformation, its technology strategy and its relationships across the AI ecosystem.
- Huang is known for an intensely hands-on, demanding management style, maintaining tight control over key decisions, and expecting exceptional commitment and execution from his team.
There is no obvious replacement; hence, his departure will unsettle confidence in NVIDIA’s next chapters, raising questions about the billions being committed to AI infrastructure. The market reaction this week has already shown how quickly that uncertainty can spread: leadership turmoil was enough to wipe hundreds of billions of dollars from NVIDIA’s value and send shockwaves through AI-related stocks in the US, Europe and Asia. Even the ASX copper miners were caught up in the sell-off on Thursday.
The risk is not simply what happens to one company, but what happens to an entire investment theme that has become so heavily reliant on it. However, we’ve been here before in the last few months with the SOX correcting around 40% on doubts about the returns on AI capital expenditure and an aggressive unwind of crowded positions, but if it can hold last week’s swing low, we believe the “AI Trade” is alive and kicking, especially from a risk/reward perspective – the big question is how do we play it.
NB: it’s only been a few days, but NVIDIA’s recovery to close down ~4% overnight was encouraging considering its initial ~14% plunge as trading commenced in the US.
Our bias is certainly now firmly on the buy side of NVIDIA after correcting nearly ~40% from only a month ago. This is a huge company and while Jensen’s contribution can’t be overstated, their success has been underpinned by more than one individual. Buying when there is no much negative press around a stock when nothing has really changed from an earnings perspective, more often than not, is a profitable approach.
- We are looking to take a small initial position in NVDA in the International Equities Portfolio, with the view of building on it over time.
MM is now bullish towards NVDA around US$165
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This morning we’ve cast the net further and looked at four other US traded stocks within that sector. These may be beneficiaries if NVDA continues to stumble, but our bias remains towards buying weakness in NVDA.
