Nvidia Stock: Buy the Dip After CEO Shakeup?

Nvidia (NVDA) stock has been under pressure, falling 27% from its October high before a bombshell report from The Wall Street Journal on November 11 revealed that the board was preparing to oust CEO Jensen Huang. The next morning, Nvidia confirmed Huang's resignation and named CFO Colette Kress as interim CEO. The stock plunged further, briefly trading below $150 and sitting around $156 shortly after, a 35% decline from its all-time high.

The market's reaction reflects the immense influence Huang has had on Nvidia's rise to become the world's leading AI chip company. His vision and leadership are widely credited with driving the company's explosive growth. The suddenness of his departure caught investors off guard, leading to a sharp sell-off.

However, the underlying business remains robust. In its last reported quarter, Nvidia's revenue more than doubled year over year, and management projects about 70% growth in the next fiscal year. The company continues to see insatiable demand for its AI chips, with data center revenue growing 117% year over year.

The stock's decline has brought its valuation down significantly. At the November 11 close, Nvidia traded at around 11 times forecast fiscal 2028 earnings, well below the 14 times multiple the author previously considered a fair buy price. Even after accounting for the risk of Huang's departure, the shares appear undervalued relative to the company's growth prospects.

The CEO transition introduces uncertainty, but Nvidia's fundamentals are still strong. The company's revenue growth is accelerating, and its new Vera Rubin systems are expected to drive further demand. The stock's low valuation provides a margin of safety, especially if earnings estimates hold.

Investors must weigh the risk of leadership change against the company's powerful growth trajectory. While Huang's resignation may warrant a lower valuation, the current price already reflects significant pessimism. At 11 times forward earnings, the stock is pricing in a lot of bad news, but the company's growth story remains intact.

The upcoming fiscal third-quarter earnings report on November 17 will be a key test. If Nvidia delivers strong results and guidance, it could reassure investors that the business is on track despite the leadership change. Conversely, any disappointment could exacerbate the sell-off.

For long-term investors, the dip may represent an attractive entry point. The author estimates fair value at around $190 per share, even after adjusting for Huang's departure, which is about 20% above the current price. The risk-reward skew appears favorable, with limited downside and significant upside if growth continues.