Nvidia (NVDA) fell 5.53% on Tuesday, extending a selloff tied to CEO Jensen Huang’s affair with an alleged Chinese spy. CNBC’s Investment Committee split on how to trade Nvidia, weighing a buying opportunity against lasting governance risk.
Dan Ives, senior managing director at Yorkville Ives & Co, expects the board probe to last four to six weeks. Nvidia shareholders face an overhang until it ends.
Is the Nvidia Selloff About Governance or Demand?
Josh Brown, CEO of Ritholtz Wealth Management, said on CNBC he has held Nvidia 12 years through 70% drawdowns. He does not favor removing Huang unless evidence shows he knowingly broke rules with other countries.
Another panelist called it a governance discount, not a demand discount, and wanted to top up an underweight position.
Meanwhile, the Philadelphia Semiconductor Index (SOX) gained nearly 7% on Monday as Nvidia dropped 4%, according to Yahoo Finance.
Could Quantitative Selling Change How Funds Trade Nvidia?
Joe Terranova, senior managing director at Virtus Investment Partners, said analyst views barely moved. About 78% still rate Nvidia a buy, and the consensus 12-month target slipped from $324 to $320.
However, Seaport set a $180 sell target, per the panel, while Citi cut to $285 and Wells Fargo to $300. Bank of America’s removal of Nvidia from its US 1 List of top picks left its buy rating intact.
Terranova also said a high-frequency trader told him it follows price action, not fundamentals. A break below Nvidia’s 52-week low could send more algorithm-driven funds to the sidelines.
Separately, Ives said investor chatter implies a 15% chance of Huang’s removal. He has said an exit would cut Nvidia’s value by 25% to 30%.
Alice Huang worked as an executive at Megaspeed, a Singapore-based Nvidia customer. A network linked to her reportedly shipped at least $7.5 billion in Nvidia hardware to Chinese companies, The Information said. Beijing calls the spy allegation unsubstantiated.
Trump has backed Huang to stay, yet the FBI is examining whether foreign intelligence targeted him.
A board finding that Huang was only a target of foreign intelligence would ease the governance concern. In contrast, confirmed diversion could bring export restrictions or fines, turning a governance debate into a regulatory one.
