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Reuters reported that directors met Wednesday to decide Jensen Huang’s future after The Wall Street Journal reported that the board was preparing to remove him. Bloomberg says Nvidia is working with an outside firm to identify candidates and is considering an interim CEO. The meeting followed Nvidia’s announcement of an independent inquiry into whether Huang was targeted by a foreign intelligence operation. Huang acknowledged being unfaithful in a memo to employees. The New York Times separately reported an alleged affair with an Nvidia executive who reported to him. The Washington Post reported that the White House was staying out of the board’s decision. Huang has led Nvidia for 33 years, oversees dozens of direct reports and has no publicly named successor. Nvidia still has its chips, its order backlog and CUDA. Wednesday’s selloff showed how much investors also value having Jensen Huang in charge. It is also interesting to see that the most powerful proxy of the AI supercycle is being caught in the middle of a human behavior storm… 3 personal thoughts: 1) I don’t think that the departure of Huang will kill the AI story 2) However, market wants to know if his / her successor will be as good as him in terms of execution 3) Nvidia valuation is already on the cheap side; not sure there was a large Huang premium at this price Source: stockmarket.news
The average is 9.9x. Either the market thinks these earnings won't last or this is one of the best setups out there. Source: Rand Group
The stock jumped nearly 8% after-hours The number we are watching: its $1 billion quarterly interest bill. The Q3 numbers show how fast demand for AI compute is growing: ▪️ Revenue hit $3.66B, up 168% YoY ▪️ Adjusted EBITDA reached $2.26B, up 169% ▪️ Revenue backlog surpassed $132B ▪️ Annualized revenue run-rate outlook rose to $20B–$21B Now look at what it costs to build the capacity to serve that demand. CoreWeave expects $35B–$39B in 2026 capex. It also expects $1.05B–$1.15B in interest expense in Q4 alone. That’s more than $4B annualized at the Q4 pace. And even with revenue more than doubling, CoreWeave posted a $529M adjusted net loss in Q3. There is still significant long-term potential. Customers are committing billions, and the backlog gives CoreWeave a substantial pipeline of future revenue. How much cash that revenue generates will depend on what it costs to build and finance the infrastructure behind it. How much of that $132B backlog will translate into free cash flow after capex and interest? That’s the number we want to see. Source: CNBC, Merlin Capital