'Too many unknowns': experts urge caution as retail investors snap up Nvidia on the dip

Even as Nvidia's share price has plunged in the wake of the scandal surrounding former CEO Jensen Huang and his abrupt resignation, retail investors have been rushing to buy the dip — from direct stock purchases to high-risk products such as leveraged ETFs. Experts are urging a cautious approach, warning that many potential headwinds remain, including allegations that Nvidia chips were smuggled into China, and that the leadership vacuum could allow competitors to gain ground while Nvidia stumbles.

Joe Hegener, chief investment officer at US asset manager Asterozoa Capital Management, told the Nikkei on Friday that "there are too many unknowns surrounding Nvidia right now." He added that semiconductor sales risks tied to China are being underestimated, and that it remains unclear how the outlook for future management, the absence of a successor, and a congressional investigation will unfold.

"The market is too focused on Huang's personal life, including his extramarital affair," Hegener said, adding that the real issue is that Nvidia sold export-controlled semiconductors to Chinese shell companies with no substantive business operations. He also said the co-founders of Super Micro Computer — a US electronics manufacturer indicted by the US government on charges of smuggling Nvidia semiconductors into China — could face up to 20 years in prison. He warned that Nvidia itself could face criminal liability in connection with AI chips that made their way to China.

Hegener said AI and data center issues are also likely to become political flashpoints in a Congress that has shifted toward Democratic control following the midterm elections. "Going forward, the situation surrounding Nvidia will act as a significant tailwind for competitors," he said, adding that companies such as AMD stand to benefit.

Ryuta Makino, an analyst at US asset manager Gabelli Funds Research, also cautioned that "there is a possibility that more negative factors for the company could emerge in the near term, and if that happens, the share price could fall further in the short run." He said the priority right now is to wait and see how things develop.

Makino said Nvidia's AI semiconductor Rubin and its next-generation successor Feynman already have much of their development locked in, so supply and demand should not be significantly affected. He said any risks materializing would more likely surface after 2029. His bigger concern was that during Nvidia's leadership vacuum, "AMD, Broadcom and others could gain market share."

Some analysts, however, remain optimistic that Nvidia's fundamentals are intact and its product edge will hold. Dan Ives, a senior technology analyst in the United States, said shortly after Huang's resignation that "the board did what it had to do — rip off the Band-Aid and lead Nvidia into its next chapter without Huang," adding that the company still holds a lead over its rivals. Neil Wilson, an analyst at investment platform Saxo UK, said Nvidia "is well positioned in terms of upcoming products and orders."