Nvidia: Cutting Our Fair Value Estimate by 19%, Given the Firm’s CEO Transition and Turmoil

Key Morningstar Metrics for Nvidia

• Fair Value Estimate: $250.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Very High

Nvidia NVDA founder and CEO Jensen Huang has resigned amid investigations into two extramarital affairs, one with a direct report and the other with a possible Chinese spy. CFO Colette Kress will serve as interim CEO while Nvidia seeks a permanent replacement among internal and external candidates.

Why it matters: Nvidia remains in crisis mode after the swift, stunning downfall of the only CEO it has ever known. The new CEO will have tough work restoring trust with customers and financial partners, as well as understanding the disparate product development happening in-house.

• A report from The Information, quoting an unidentified “executive at a cloud provider,” said the provider has already indicated that it will consider using chips from Google or AMD.

The bottom line: As we reflect on Huang’s rapid ouster, we reduce our fair value estimate for Nvidia to $250 per share from $310 and maintain our wide moat and Very High Uncertainty Rating.

• In our 10-year discounted cash flow model, we reflect the management chaos by reducing our long-term revenue forecasts and raising our discount rate, or cost of equity, on Nvidia’s future earnings, based on lower optimism about the company’s long-term product roadmap.
• It is unclear whether a new CEO can adeptly manage new product initiatives as well as Huang, or whether any partnerships will fizzle under new leadership. Similarly unclear is whether a new CEO leads to an exodus of talent. Thus, we find it prudent to cut our estimates.

Long view: We still have little evidence of a pause in the AI buildout. The Information’s article is a concerning early sign of a potential customer shift away from Nvidia. While firms may consider a shift, we don’t think it’s guaranteed they will act on it.

Our Concerns About Nvidia Under New Leadership

We have internal operational concerns about Nvidia under a new leader. We like the analogy Huang provided wherein Nvidia is a Formula One race car and he is the driver. In other words, everything at Nvidia was tuned to support Huang when he had the wheel. To extend the analogy, we are concerned whether the Nvidia racecar will remain finely tuned. Someone who can match Huang as, say, a technology visionary might not be as successful in other areas where he excelled, such as dealmaking or motivating a business unit.

Geopolitics is another area of concern. Huang appeared to have a good working relationship with US President Donald Trump. With that relationship severed, we tend to think the government will need to get cozier with Nvidia’s new leader, rather than a scenario wherein Nvidia has less geopolitical influence. For better or worse, Nvidia’s data center gear sits at the center of the AI ecosystem. For the US, or any government, to succeed in AI, it will need to work with Nvidia’s leadership to support future deployments, rather than hope other chipmakers somehow emerge as AI chip leaders.

Assessing Potential CEO Candidates

Prediction markets have landed on two potential internal candidates to replace Huang. Ian Buck, VP of Nvidia’s Hyperscale and High-Performance Computing business, is prominent and known to outside investors. CFO Colette Kress, who is serving as interim CEO, is also well-known to investors and has a high-level view of the business. It’s unclear whether Nvidia will value an executive with perhaps a broader view like Kress, or the VP of an important business unit like Buck.

Per prediction markets, the highest-probability external hire is Rene Haas, former Nvidia VP and current CEO of ARM. We find Haas a compelling candidate who could guide the ship, not only because of his Nvidia expertise, but also because ARM’s business model, as a chip intellectual property provider, calls for significant partnerships, dealmaking, and a clear vision for the future. Haas has communicated this well in his tenure, and he could theoretically fare well taking the big stage at CES or GTC keynotes.

Other intriguing external candidates include executives of cloud businesses within mega-cap technology companies, such as Thomas Kurian, CEO of Google’s Cloud business, or Matt Garman, CEO of Amazon’s AWS. Other non-founder executives are appearing in the prediction markets as well, such as Bret Taylor, co-creator of Google Maps and current chairman of OpenAI.

Nvidia’s China Business Dealings

Regarding Nvidia’s business relationships in China, Semafor is reporting that the US Department of Justice will investigate the firm, as well as Supermicro, an AI server maker, and Megaspeed, the Singapore cloud computing firm whose executive Huang had an extramarital affair with. We anticipate significant scrutiny of Nvidia’s international shipments and partnerships, past, present, and future.

Similarly, Nvidia’s regional revenue splits have been cloudy since the dawn of the AI boom, although this isn’t uncommon for technology companies, given the intertwined global supply chain. One consideration is that Nvidia switched its reporting from the location of AI shipments to the location of its customers’ headquarters. Nvidia’s direct customers are not necessarily the end buyers of the AI gear (like Microsoft), but rather the ODMs and OEMs that build AI servers (like Supermicro).

Our understanding is that, while Nvidia reports revenue based on the direct customer’s headquarters, US sanctions mostly focus on the end buyers of such products. Nvidia has tried to identify its end customers (where the AI servers are going) to comply with the law. Huang’s romantic relationship with a Chinese spy obviously calls this compliance into question, and he is slated to meet with the US Congress in the weeks ahead. A resurfaced short seller report from Culper Research in May 2026 also calls Nvidia’s compliance into question.

Nvidia’s Business Outlook and Competition

Fundamentally, we expect near-term revenue to remain the status quo for Nvidia, starting with its upcoming fiscal third-quarter results, to be announced on Nov. 17, where we’d expect the company’s usual beat-and-raise quarter. The CEO turmoil followed Nvidia’s October-quarter close.

In the medium term, we suspect any preexisting partnerships to install Nvidia gear within gigawatt-scale data center buildouts will remain intact. We’re skeptical of the idea that leading cloud companies will immediately cancel or trim orders with Nvidia amid the investigation. We suspect neoclouds, governments, and enterprise customers will be even stickier for Nvidia, as they might have the technological expertise or wherewithal to shift to other sources. That said, we fully expect all cloud vendors to at least consider alternatives. It is unclear how much customers may shift their buying patterns, but our revised long-term revenue estimates incorporate some of this risk.

AMD may emerge as the big winner of Nvidia’s turmoil, as it sits as a clear second-source AI GPU and AI rack-scale vendor. AMD has partnerships with Anthropic, OpenAI, Meta, Microsoft, and Oracle for its latest Helios AI rack-scale systems. We think it would be prudent for Google and Amazon to partner with AMD as well, in case Nvidia’s roadmap fails to live up to expectations under new leadership. Even though Google and Amazon have strong in-house chips for AI, we still believe GPUs offer flexibility and programmability, as well as cloud-agnostic deployments, that would remain attractive to their cloud customers. In-house chips, such as Google’s TPUs and Amazon Trainium, will also likely be considered by a variety of AI customers for inference workloads.

We think it is unlikely that Huang would immediately turn around and build a new business that would threaten Nvidia. Nvidia’s CEO transition statement did not suggest that Huang will relinquish his share ownership, and since his children work at Nvidia, we think it is unlikely he will target a business that should still drive his net worth. In prior interviews, Huang has also said he wouldn’t launch a startup again, as he now knows the sacrifices involved. We take him at his word on this one too, while also reiterating that Nvidia sits at the epicenter of the AI ecosystem and has not been easy for anyone to dislodge.