Nvidia's shares in India have fallen significantly following CEO Jensen Huang's resignation and investor worries over a potential slowdown in AI data center expansion, driving the stock valuation to a 14-year low.
- Nvidia shares now trade at 12 times expected earnings, lowest since 2012
- CEO Jensen Huang resigns amid scandal, interim CEO appointed
- Investors cautious ahead of Nvidia's Q3 earnings report
What happened
Nvidia's stock has fallen more than 30% from its record high on October 6, now trading at roughly 12 times its expected earnings. This marks the lowest valuation level for the chipmaker in over a decade, specifically since 2012 when Nvidia was focused on the gaming graphics card market and struggling in mobile devices.
The recent stock decline accelerated after CEO Jensen Huang resigned unexpectedly following reports of a scandal involving extramarital affairs, including one with a woman alleged to be a Chinese spy. Nvidia's Chief Financial Officer Colette Kress has stepped in as interim CEO while the company searches for a permanent replacement.
Why it matters
Leadership uncertainty has rattled investors who are now cautious about Nvidia's ability to maintain its growth momentum, especially as the company prepares to report quarterly earnings. CEO transitions can delay strategic execution and impact market confidence in the near term.
At the same time, concerns about a possible slowdown in the expansion of AI data centers—critical drivers of demand for Nvidia’s GPUs—have added to the pressure on the stock. Despite these headwinds, analysts maintain optimistic profit growth forecasts, expecting Nvidia’s revenue and net profit to nearly double year over year during the October quarter.
What to watch next
Investors will closely scrutinize Nvidia’s upcoming earnings report, scheduled for Tuesday, to gauge whether the company can sustain its rapid growth without Jensen Huang at the helm. The quarterly results are predicted to show a 92% increase in revenue and an 89% surge in net profit compared to last year.
Guidance from interim CEO Colette Kress and market demand signals will be critical to watch. Any indications of weakening AI data center investments or challenges in leadership transitions could heavily influence Nvidia’s stock performance in India and globally in the near future.