How Much Is Nvidia Stock Worth Without Jensen Huang?

Nvidia (NASDAQ:NVDA) has been a surefire winner for investors in recent years. The artificial intelligence (AI) stock soared more than 1,300% from the start of 2023 through the end of October. This is thanks to the company's top AI chips and its charismatic leader, Jensen Huang.

Over the past few days, however, Nvidia has experienced a reversal of fortune. Allegations emerged of affairs concerning Huang -- one alleged affair being with a person U.S. intelligence says is a Chinese spy. Nvidia's board opened an investigation, then met to discuss the company's future, and Huang subsequently resigned.

Now investors are asking: How much is Nvidia stock worth without Jensen Huang at the helm? Let's find out.

Jensen Huang. Image source: Nvidia.

Nvidia's turmoil, in detail

First, let's consider the recent turmoil in more detail. Last weekend, Nvidia's board announced an investigation "in light of recent reporting that founder and CEO Jensen Huang has been the target of a foreign intelligence effort."

In an email to employees obtained by CNBC, Huang apologized for being unfaithful to his wife and expressed his commitment to Nvidia and his willingness to cooperate with the investigation.

Days later, The New York Times reported that Huang also had an affair with Nvidia executive Kimberly Powell. Nvidia's board called a meeting to discuss the company's future, and Huang resigned early Thursday morning. The board named Colette Kress, Nvidia's chief financial officer, as interim CEO and will search internally and externally for a permanent leader.

Nvidia fell a little more than 4% in the Thursday trading session following the news, bringing the stock to a 10% decline so far this year. This is a sharp departure from the stock's performance over the past few years. As mentioned above, it's roared higher and has been the "go-to" AI stock for many investors. Nvidia's market capitalization even reached beyond $5 trillion at its peak, securing its position as the biggest company.

Will Nvidia's stock rise?

Now, let's consider how much Nvidia stock is worth without Jensen Huang in charge. Huang offered a significant amount of value since he not only was the founder, but he maintained a solid position in the driver's seat, with 60 employees reporting directly to him. He was seen as a spokesperson for AI around the world, considering his company's AI chip dominance and his focus on innovation. And the world looked to Huang for clues about the next chapters of AI growth.

Nvidia stock closed at about $166 on Nov. 12. Dan Ives of Yorkville Ives and analysts at Citi see the value of the stock at $225 without Jensen Huang. This is down from $300 for Ives and $285 from Citi. So this level still implies a gain from today's price. It's important to note that Nvidia is historically cheap relative to its earnings today, trading at only 21x trailing 12-month earnings.

NVDA PE Ratio data by YCharts

Chip contracts are set months in advance, and Nvidia's innovation wheels are turning, with updates planned and teams working on the technology. So there's reason to be optimistic about the company's products and earnings over the next few quarters. And that's why the stock's value could continue to advance from here.

But significant risks remain. Investors might question whether the permanent CEO, once named, will have the vision and strategy to keep Nvidia in its leading position in the AI market. Meanwhile, in the near term, Nvidia may come under deeper government scrutiny and could even face renewed export restrictions to China. A Senate committee summoned Huang to testify next month regarding his alleged relationship with the woman U.S. intelligence is calling a spy. Any information from such testimony could have implications for Nvidia.

Considering Nvidia's well-established technology and market position, as well as the placement of Kress, who knows the company well, in the driver's seat, Nvidia could continue to advance toward $225. But the path may be choppy until the uncertainties have lifted and a permanent CEO establishes a clear strategy.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.