Is Nvidia Stock a Buy on the Spy Allegation Sell-Off?
Nvidia (NASDAQ:NVDA) shares have slumped by more than 20% since news broke that CEO Jensen Huang was having an affair with someone who is now accused of being a spy for the Chinese government. Huang has since admitted to the relationship. Nvidia’s board and independent counsel will run an investigation into the matter, but believe that neither Nvidia’s secrets nor national security were compromised. With that likely to prove the case, the stock looks like a buy on this dip.
One of the biggest reasons for Nvidia’s success over the years has been the leadership of Huang, so this matter certainly does add some risk to the investment thesis. He co-founded Nvidia back in 1993 and has been its only CEO since its inception. His true brilliance in guiding the company has come from his rare ability to see where tech markets are headed before most others.
His foresight could be seen all the way back in 2007, when Nvidia debuted its CUDA software platform. The chipmaker originally developed its graphics processing units (GPUs) to speed up graphics rendering in video games, but Huang saw potential for these chips in other areas, including in the then-emerging field of artificial intelligence (AI). CUDA allowed developers to easily program its chips for whatever parallel-processing tasks they required, and Huang smartly seeded the free software platform into institutions that were doing early work on AI. The result is that most original AI code was written on CUDA and optimized for Nvidia’s chips, which gave its GPUs the wide moat they continue to have in AI model training today.
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