Weekly insights + SMS alerts
NVIDIA Corp. (NASDAQ:NVDA) stock gained nearly 3% in Friday's premarket trading after falling 4.34% on Thursday. The stock has lost 27.28% over the past month.
The rebound comes as NVIDIA faces a difficult leadership transition following Jensen Huang's departure.
Experts remain divided over whether strong AI demand can offset leadership uncertainty, investigations and growing competition.
The sharp selloff has sparked a debate over whether NVIDIA's discounted valuation offers investors a rare buying opportunity or signals more trouble ahead.
While strong AI demand and a robust order pipeline support the bullish case, leadership uncertainty, mounting competition and potential fallout from investigations could make the stock a value trap.
Prime Capital Financial CIO Will McGough told CNBC on Friday that NVIDIA's order visibility over the next 12 to 24 months supports revenue and earnings.
However, he warned that rebuilding investor confidence could take time, despite NVIDIA trading at roughly 10 times forward earnings.
McGough also highlighted growing competition from Advanced Micro Devices Inc. (NASDAQ:AMD), Broadcom Inc. (NASDAQ:AVGO), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon.com Inc. (NASDAQ:AMZN) and Chinese chipmakers.
BDA Chairman Duncan Clark told CNBC that NVIDIA's lack of a clear succession plan exposed governance weaknesses.
He suggested replacing Huang's technical, political and industry leadership roles could require several executives.
Meanwhile, Seaport Research's Jay Goldberg maintained his Sell rating, warning that customers could accelerate their shift toward AMD and custom chips.
Goldberg told CNBC that NVIDIA's limited available chip capacity also reduces the potential for earnings surprises.
Columbia Law School professor Dorothy Lund told CNBC that there was "a lot of evidence" NVIDIA's board was "very deferential" to Jensen Huang.
She cited the lack of a succession plan, the absence of a board chair and longstanding relationships between Huang and several directors as signs of weak oversight.
Speaking on CNBC, Lund pointed to the lack of a succession plan, the absence of a board chair and longstanding ties between Huang and several directors.
She also warned that NVIDIA's flat management structure, with more than 60 executives reportedly reporting directly to Huang, created significant risks during a leadership transition.
However, Lund said the board had acted quickly and decisively following the recent revelations, despite lingering questions about what directors knew and when.
Yorkville's Dan Ives called Huang's departure a "dark day for NVIDIA."
However, he remains bullish, valuing NVIDIA at $225 per share even without Huang.
Ives believes NVIDIA's central role in the AI infrastructure boom remains intact.
Asus Co-CEO S.Y. Hsu told CNBC that NVIDIA's technological advantages remain strong.
However, he plans to monitor product quality, costs, delivery and innovation under new leadership.
Singtel CEO Yuen Kuan Moon said the disruption has had little immediate impact on its data center operations.
Despite strong AI demand, NVIDIA now faces mounting pressure to prove it can sustain growth without its longtime leader.
NVDA Price Action: NVIDIA shares were up 2.64% at $170.57 during premarket trading on Friday, according to market data.
Real-time alerts on price moves, news, and trading opportunities.
Join 20,000+ investors. No spam, ever.
