Al Dhabi Capital senior portfolio manager Rashmi Garg said Nvidia’s lack of a clear succession plan could pressure its shares, despite her view that industrywide GPU and networking demand remains firm.
Nvidia’s board announced Nov. 8 that it had opened an inquiry into reports of a foreign intelligence effort targeting founder and CEO Jensen Huang. A committee of independent directors, assisted by outside independent counsel, will oversee the inquiry, as earlier coverage of the inquiry noted. The board said it had no reason to think national security or Nvidia’s confidential information had been compromised and expressed confidence in Huang.
In a Nov. 10 Bloomberg interview, Garg identified succession planning as a vulnerability. She said replacing Huang would be difficult and that uncertainty about his leadership could put substantial pressure on Nvidia shares. She urged investors to assess that governance risk separately from demand for AI equipment.
Garg’s demand assessment covered GPUs and networking across the industry, rather than current sales of Nvidia’s own products. She said AI token usage and demand for that equipment showed no sign of cooling. In her view, those trends continued to support the broader AI investment case despite the concerns surrounding Huang.
She described the selloff in AI shares after the U.S. midterm elections as excessive. Garg said the election outcome had raised questions about whether data center construction would continue, but she viewed the underlying demand as resilient. She attributed the subsequent rebound partly to buying after the decline and partly to a reassessment of the market.
Nvidia reported $89.0 billion in data center revenue for the quarter ended July 26, up 117% from a year earlier. Those results predate the board’s announcement and do not describe demand after the inquiry began.
Nvidia has scheduled a call on its fiscal third-quarter results for Nov. 17 at 5 p.m. ET.
