Data Moats

BREAKING NEWS: JENSEN HUANG HAS RESIGNED FROM AS NVIDIA PRESIDENT, CEO, AND BOARD MEMBER. cna.asia/4zm1Mzl

Surprised that the public isn’t aware of how the importance of Jensen in Nvidia’s success, brushing off the possibility of him being ousted as a nothingburger. Jensen founded the company from the very start in 1993. - Saved the company alive multiple times, especially in 1996. He bought a hardware emulator, which let Nvidia test chips without physical prototypes when they were running out of cash - Bet on CUDA’s value for more than 10 years despite everyone around him pushing back on the tech. CUDA positioned Nvidia for the AI boom when neural nets required mad computing power - Nvidia’s culture has literally been built around him since day one. Nvidia’s most brilliant engineers always deferred to him and his expertise when it mattered most, and he constantly pushed the limits with chip innovation. - DOZENS of executives report to Huang alone. A new CEO will have to gain the respect, responsibilities, and match previous expectations of growth if it happens, which will be tough assuming there’s pushback on selling chips to China. Nvidia’s no doubt a brilliant company. But without their king at its helm, I believe their growth trajectory falls drastically, and will rerate dramatically more than people would expect. Until a succession plan is in place, Nvidia is only a good buy now if Jensen continues as CEO.

While I’m sure $NVDA’s metrics look amazing now, the market doesn’t price uncertainties well. The affair isn’t remotely a problem. The problem is the fact that Jensen is losing his position of power to lobby on distribution of his chips. A large % of Nvidia’s revenue includes China and Singapore, backdoor or not. The valuations will compress, and the market reprices based on expectations, not cold hard valuations. Outside of economic value, you have to consider the fact that chip innovation and distribution plays a massive role in military warfare, and is a priority for many countries. The bigger they are, the harder they fall. This isn’t easily modelled, and the more uncertainties there are, the higher chance of a miss in market expectations. I’m personally an early investor of $AMD since $70 / share, and see it appreciating better over the long term compared to $NVDA in terms of share price growth from today. Let me know your thoughts.

Duolingo ($DUOL) might be the most important AI stock nobody calls an AI stock.