Following the news regarding a new relationship with a company executive and his direct subordinate, Jensen Huang submitted his resignation yesterday and was temporarily replaced by Chief Financial Officer (CFO) Colette Kress. Additionally, the company's board announced the initiation of a selection process to find a new CEO for the company, considering both internal and external candidates.
Huang's swift resignation was received positively by the market (shares in yesterday's session moved from a -14% drop before the announcement to close with a -4.3% drop) as it puts an end to the possibility of an internal struggle between the CEO and the company. In any case, the situation of uncertainty remains given that: (i) the replacement process could extend over time and (ii) it is difficult to estimate what the impact of Huang's departure will be on the future evolution of the business. We believe that, in the short term, shares could continue to maintain a higher risk premium and therefore could remain weighed down depending on the flow of news regarding candidates for the new CEO and the development of investigations into possible espionage.
Beyond this, with a medium to long-term view, we believe that the current valuation levels of Nvidia (PER27 of 10.4x with an expected EPS27 growth of +70%) represent an attractive level even assuming a potential deterioration in future business growth as a result of Huang's departure, which is why we reiterate our Buy recommendation. We continue to believe that the semiconductor sector is the most benefited within the AI value chain and that Nvidia will remain one of the key players in the development of the sector.