How Wall Street Is Bracing For the Post-Jensen Huang Nvidia Era

Stacy Rasgon (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:25)

Tracy, we're recording this Friday, November 13th. The NVIDIA story is so fast moving that we have to sort of be careful with the episodes we record because we don't know what's going to happen by the time it comes out. But one thing we at least do know is that NVIDIA is scheduled to report earnings next week. And at least that is the next sort of thing that we know we can't, it's the one known unknown, so to speak, that we can look forward to, right? It's the one thing we do know is that there's something on the calendar.

Tracy Alloway (0:57)

That's right. I feel like this is another one of those episodes where we have to say exactly when we're recording. So this is 1210 New York time. The stock is down about 4% as we're recording. And obviously, in corporate analyst space, we hear people talk about key man risk all the time, which is a hard thing to actually measure and think about. But I think in the case of Jensen, this is kind of the ultimate key man risk, right? This is the guy that built the company.

We know from various reports that he was intensely involved in the company itself, something like 60 direct reports, no succession plan, really. It seems like he was very involved in individual like financing deals and things like that. And so you can imagine if you're an analyst covering Nvidia stock right now, it must be pretty challenging.

Joe Weisenthal (1:47)

No, totally. I've met a few people in my life who have talked about like their companies, they're like, my company got some investment from Nvidia, I got to meet Jensen Huang. I was like, oh, that's cool. But now I go back and listen and remember hearing these stories. And it's like, wow, he was super involved. Like that same story is like on one, it's sort of like that meme is like, oh, that's great. We have a super involved CEO. And then it's like, oh, we have a super involved CEO.

It's as this good or bad. Anyway, so if you're thinking, if just thinking about it from a stock perspective, you have the key man risk, you have all of the legal questions that the company is going to face and how, you know, just everything related to the sort of mega speed and what it knew when and all that stuff. And then there's just the fundamentals of the business. And there's chip demand, but also its role in financing a big ecosystem of companies that either use and buy Nvidia chips.

Tracy Alloway (2:43)

There's a lot to talk about, obviously.

Joe Weisenthal (2:45)

All right. Let's not waste more time. We really do have the perfect guess. Someone we haven't had him on in a while, but he's who we talk to frequently and we want to talk about Nvidia specifically. We're going to be speaking with Stacy Rasgon. He's a managing director and senior analyst at Bernstein Research. He covers this company, covers semiconductor, semiconductor equipment, knows the company very well. If you listen to earnings conference calls, you've probably heard his voice before. So Stacy, thank you so much for coming back on Odd Lots. It's been too long. We've missed you.

Stacy Rasgon (3:17)

It has been and it's my pleasure, my great pleasure to be here. So thanks for having me on again.

Joe Weisenthal (3:22)

How weird is this a moment as a stock analyst? Just figuring it out, just professionally, like your job is not to figure it out. How many dimensions and variables are you trying to work through?

Stacy Rasgon (3:33)

This is a very weird moment as an analyst covering this company, and a sad moment, let's be honest. I mean, there's no good solutions or outcomes or anything else coming out of this entire mess. Like it's just a disaster of the highest proportions, frankly, and it's been surreal covering this as an analyst. It's not been fun. Clearly, Jensen's having a worse time than we are, but it's been a long week for sure.

Tracy Alloway (3:59)

You actually decided to downgrade Nvidia earlier this week. What was the catalyst for taking that move? Because that's a pretty big call when the headlines are still flying.

Stacy Rasgon (4:10)

Let me step back actually. The news flow around this started, I mean, it had been coming up in dribs and drabs, and it crystallized on Friday evening when the article started coming out that he had had a relationship with this individual, Alice Wang. It was coming out that the US intelligence community was concerned that she might be an asset for China. By the way, I will say I was not necessarily convinced at that point. I'm still not necessarily convinced that she was necessarily a spy.