On one side, Musk openly supports, and on the other side, Nvidia's stock price declines against the market trend.
On November 9, the U.S. stock market saw a strong rebound, with the Nasdaq Composite Index rising 2.74%, the S&P 500 Index rising 2.35%, and the Dow Jones Industrial Average rising 2.15%. However, Nvidia went the opposite way. According to BiyaPay market data, Nvidia (NVDA) closed at $178.67 that day, down 4.27%, with an intraday low of $170.24.
While the broader market rose and the semiconductor sector rebounded overall, Nvidia continued to face pressure. This contrast shifted the market's focus from AI chip demand and company performance to CEO Jensen Huang and the corporate governance issues behind him.
Meanwhile, Musk publicly responded to Sequoia Capital partner Shaun Maguire's post, stating, "I agree." Maguire criticized Huang's personal behavior in the post while also emphasizing the importance of his leadership in the U.S. AI industry. Musk's brief statement again pushed this controversy into the public spotlight.
For investors, what's truly worth paying attention to is not just the public statements of celebrities, but a more practical question: When a company's strategic direction, customer relationships, and industry influence are highly tied to its founder, will the uncertainty surrounding this key figure affect the company's performance expectations and stock valuation?
The market is re-examining this question.
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Will this controversy remain a short-term market sentiment or evolve into variables that affect Nvidia's long-term operations and valuation? This needs to be evaluated from multiple aspects, including stock price, board investigations, political environment, and company fundamentals.
Why did the Nasdaq rise 2.74% while Nvidia fell?
First, let's take a look at the market performance of the day.
On November 9, the three major U.S. indices collectively rebounded. The Nasdaq rose 2.74%, the S&P 500 rose 2.35%, and the Dow Jones rose 2.15%. The Philadelphia Semiconductor Index rose about 6.9%, with semiconductor-related stocks like AMD and Applied Materials showing notable rebounds.
However, Nvidia did not follow this trend.
According to BiyaPay market data, Nvidia closed down 4.27% that day, dipping to around $170 during intraday trading, marking a multi-month low. Compared to the previous trading day's closing price of $186.64, the stock price faced significant pressure.
This indicates that Nvidia's weakness on that day was difficult to fully explain by the broader market or the entire semiconductor sector's adjustments. News concerning the company itself has become an important factor influencing investors' trading judgments.
However, it cannot be simply attributed to the Huang incident for the entire decline on that day. The AI supply chain had previously experienced severe fluctuations, and concerns regarding capital expenditures from tech giants, data center construction, and AI investment returns still persisted. Changes in investors' positions and short-term trading behaviors could also amplify individual stock volatility.
Notably, Nvidia regained some of its declines after dipping during the day, but still closed lower for the day. This indicates both selling pressure and fund selection to buy in the market. A rebound during the trading day alone does not allow for a judgment on whether buying was from long-term investors, short-term traders, or short covering.
For holders, what truly needs to be judged is: Will the new worries in the market enter future profit forecasts, or will they mainly manifest as valuation discounts from short-term uncertainties?
Why are Musk and Ackman publicly supportive, and why is Huang so important?
The widespread attention this incident has received is closely related to Huang's position within Nvidia and the global AI industry.
Musk's response stemmed from a post by Sequoia Capital partner Shaun Maguire. Maguire believes that there are serious issues with Huang's personal behavior, but also emphasizes that his leadership has significant value in the U.S. AI industry.
Billionaire investor and Pershing Square founder Bill Ackman also expressed support for Huang. He stated that even excellent individuals can make mistakes and hopes that the issues will not transform into national security risks.
These statements do not imply that the individuals involved believe all issues are unimportant but rather reflect a reality: Huang is not only the CEO of Nvidia but also a key figure in the narrative of the U.S. AI industry's development.
This importance is first manifested in the strategic direction.
From the GPU product roadmap to the CUDA software ecosystem to the entire data center computing platform, Nvidia's development over the past years has been closely tied to Huang's long-term judgments. He is responsible for the company's strategy and has long been involved in large customer relationships, industry collaborations, and the direction of technology.
Bernstein analysts particularly mentioned the key person risk concerning Nvidia in relevant commentary. Huang has a significant impact on the company's long-term strategy and development direction and has about 60 direct reports. If he is unable to continue leading the company, there is currently no clear answer as to who could take over this role.
Bernstein maintained its existing rating for Nvidia and its $400 price target, but believes that the controversy surrounding the CEO could continue for a period.
This effectively points out the duality that investors need to consider.
On one hand, Huang's experience, industry influence, and customer relationships are part of Nvidia's competitive advantage; on the other hand, if the company relies too much on one person, key person risk can also become an overlooked factor in valuation.
Recognizing Huang's contributions to the industry does not contradict the demand for Nvidia to improve governance and oversight mechanisms.
What is the current status of the board investigation, Trump’s statement, and the shareholder lawsuit?
To understand this controversy, it is necessary first to differentiate between media reports, company announcements, and confirmed facts.
On November 8, the Nvidia board released a statement announcing the initiation of an independent investigation concerning recent reports that Huang may be the target of foreign intelligence operations.
The investigation will be overseen by a committee composed of independent directors, assisted by external independent lawyers.
The board stated in the declaration that there is currently no reason to believe that U.S. national security or Nvidia's secrets have been compromised, and also stated that Huang supports the investigation and has committed to cooperating. The board expressed its confidence in Huang and his leadership team.
There is an important distinction here: starting an investigation does not imply that the related allegations have been confirmed; at this stage, the board indicates that there is no evidence to show that national security or company secrets have been compromised, which does not mean that the investigation has concluded.
Huang previously acknowledged marital infidelity in a letter to employees but did not detail the entirety of the related relationship in public statements. Media reports linked it to a relationship with a Chinese businessperson, relating this to U.S. intelligence investigations.
On November 9, U.S. President Trump publicly stated that he spoke with Huang that day. Trump said he asked Huang if he knew whether the related woman was a spy, to which Huang replied he did not know; Trump stated he believed him, adding that the FBI is investigating the matter.
This statement extended the incident further into the realm of U.S. politics and national security.
Huang has maintained close interactions with the U.S. government, and Nvidia is positioned at the core of advanced AI chips and the global semiconductor supply chain. Therefore, this matter not only involves internal governance but may also be affected by export control, national security review, and the political environment.
In addition, after the U.S. market closes on November 9, Nvidia and Huang were hit with a proposed securities class action lawsuit from shareholders. The plaintiffs accused the company of issues with information disclosure related to the relevant matters, believing that investors may have incurred losses as a result.
It should be particularly noted that this lawsuit was filed after regular trading ended that day and cannot be considered a direct cause of the stock price decline during intraday trading on November 9. The relevant content remains a plaintiff accusation and does not imply that a court has found Nvidia or Huang liable.
Going forward, investors need to focus on three directions: whether new facts emerge from the board investigation, whether the company needs to supplement information disclosure, and whether related legal procedures will further impact corporate governance and business arrangements.
How will the Huang incident affect Nvidia's valuation?
Stock prices not only reflect how much a company can earn but also reflect investors' confidence in the degree of future profit realization.
This is why significant events can impact stock prices even if the company's current performance does not change immediately.
For Nvidia, Huang's personal influence has become part of the long-term investment narrative in the market. When investors begin to worry about the stability of the core management team, they may reassess the company's future strategic execution, customer relationship maintenance, and continuity of major decisions.
This change is typically reflected in valuation.
Assuming investors originally believed Nvidia could maintain high growth in the coming years and were willing to pay a high valuation for that growth, once management uncertainty increases, even if profit forecasts are not temporarily downgraded, investors may demand lower valuation multiples to compensate for new risks.
However, this does not mean the fundamental operations of Nvidia have undergone substantial changes.
Nvidia has a large engineering team, a mature product system, a CUDA software ecosystem, supply chain partners, and long-term customer relationships. These capabilities won't immediately disappear simply because a manager is under investigation.
What truly needs to be focused on is how Huang's personal influence is distributed in relation to the company's organizational capability.
If the board investigation does not uncover further facts affecting operations, and if the company's product development, customer delivery, and management team can remain stable, then the event may mainly represent a temporary risk discount.
If subsequent changes in management arrangements, client cooperation adjustments, or impacts on company strategy execution arise, the market may further downgrade its judgment regarding future profitability and growth continuity.
Therefore, when reevaluating Nvidia, one cannot only ask how much the stock price has dropped, but must also clarify which assumption they are adjusting: future revenue growth, profit margins, management stability, or the valuation level they are willing to pay.
With the earnings report approaching on November 17, which data should be closely monitored?
Nvidia has scheduled to release its Q3 earnings for FY 2027 on November 17, local U.S. time, corresponding to the morning of November 18 in Beijing time.
This earnings report will become an important window for validating operational performance in the upcoming period.
First, let's look at the previous quarter's performance. Nvidia's revenue for Q2 FY 2027 reached $96.221 billion, a year-on-year increase of 106%; among which, data center revenue reached $89 billion, a year-on-year increase of 117%; GAAP gross margin was 75.0%.
The company previously provided a revenue guidance for Q3 of $108 billion, with a fluctuation of 2% up or down. This implies that the market still has high expectations for Nvidia's growth in the next quarter.
This earnings report should focus on at least four aspects.
First, can revenue meet guidance?
Data center revenue remains Nvidia's most important source of growth. Investors need to observe whether the purchasing demand from major cloud service providers and AI companies can continue to translate into actual deliveries and revenue.
Second, can gross margins remain stable?
High revenue growth does not necessarily mean profit margins will increase simultaneously. Product mix, system costs, supply chain arrangements, and new platform delivery rhythm may all have an effect on gross margin performance.
Third, operating cash flow and customer payment situations.
Building AI infrastructure requires significant capital investment. Whether customers have the ability to continuously pay for purchases and whether the company's accounts receivable and operating cash flow remain healthy are important bases for judging the quality of growth.
Fourth, how does management respond to governance and operational issues?
While the earnings report can address business growth and profit performance, it may not necessarily resolve questions arising from the board investigation. Investors also need to pay attention to whether the company discloses further progress in the investigation, and whether the management team can remain stable.
It is necessary to emphasize that exceeding performance expectations does not equate to the disappearance of all risks. The operational fundamentals and corporate governance are two threads that need to be observed separately.
What should investors focus on after Nvidia's decline?
This incident reminds investors that when researching a tech company, one cannot only look at products, orders, and market share.
Especially for a company like Nvidia, which has global industrial influence, core management, corporate governance, policy environment, and customer relationships can all affect long-term investment expectations.
Short-term traders can focus on whether the stock price can stabilize, changes in trading volume, and whether subsequent news continues to develop; long-term investors need to verify whether the previously favored business logic has changed.
For example, whether AI chip demand remains strong, whether customer capital expenditures continue to grow, whether product deliveries are normal, and whether the company's management team can remain stable.
If these core operational factors have not changed substantially, then short-term stock price fluctuations and long-term investment logic need to be judged separately. Conversely, if new operational or governance risks emerge in subsequent disclosures, one cannot simply ignore them just because the stock price has already declined.
From a market participant perspective, investors also need to distinguish between the quotes and trading rules of actual stocks and their related derivatives. Regular trading, after-hours trading, and on-chain related products may have different prices, trading mechanisms, and holding rights, and cannot simply be regarded as the same asset.
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Musk's public support has garnered broader attention to this controversy; Trump's statement, the board investigation, and the shareholder lawsuit have further complicated the situation.
However, for Nvidia shareholders, what ultimately determines the long-term investment value remains whether the company can maintain technological leadership, continue delivering products, fulfill profit growth, and keep stability at the key management level.
Huang's personal influence is an important asset for Nvidia, but a truly mature tech company also needs to prove that it does not solely depend on one individual.
Moving forward, the progress of the board investigation and the earnings report to be announced on November 17 will provide more basis for market judgments.
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