Jensen Huang is out at Nvidia… why Luke Lango was already cautious about Nvidia… Louis Navellier says to watch the numbers… will tomorrow’s PPI cement a 50-basis-point hike in December?

This morning, Nvidia Corp. (NVDA) announced that Jensen Huang is stepping down as CEO of the company he co-founded 33 years ago and built into a $4 trillion giant.

Chief Financial Officer Colette Kress will serve as interim CEO while the board searches for a permanent successor, and longtime director Harvey Jones becomes the company’s first-ever board chair.

NVDA tumbled as much as 14% shortly after the open and has swung sharply since. But as I write, it’s recovered some of those losses, down just 5%.

The unraveling took less than a week…

Huang apologized Sunday for being “unfaithful to my wife” in the wake of his alleged affair with Alice Huang (no relation). She’s an executive at Singapore-based Megaspeed, an Nvidia customer that U.S. intelligence officials reportedly believe is tied to Chinese intelligence services.

Late Wednesday, The New York Times reported a second affair, this one with Kimberly Powell, an Nvidia vice president who runs the company’s healthcare business.

Nvidia’s board hired the law firm Wachtell Lipton to investigate, and according to The Wall Street Journal, the Justice Department is now leading multiple investigations related to Alice Huang. Jensen Huang has denied compromising national security or company secrets.

The personal drama is only part of the story

Megaspeed was one of several companies using Nvidia chips to build AI data centers in Southeast Asia that were suspected of diverting those chips to China.

The Commerce Department has been investigating Megaspeed since late 2024. That puts a spotlight on Nvidia’s export-control compliance – and on Washington.

Huang had become one of the most influential voices on U.S. AI policy. President Donald Trump, who approved chip shipments to China over security objections, defended him just this week, calling him an “amazing guy” and an “honorable man.”

With Democrats poised to take control of Congress, that relationship is about to get a lot more scrutiny. Sen. Elizabeth Warren, set to lead the Senate Banking Committee, said Huang’s resignation “does not absolve him, other executives, or the company as a whole” of answering questions about export controls.

Then there’s the leadership question…

Huang has about 60 direct reports and has said he doesn’t believe in succession planning. Nvidia’s own proxy statement warns that failing to manage succession effectively could “hinder our strategic planning, execution, and long-term success.”

As an executive search CEO told CNBC, “He’s Mr. AI. He speaks for the industry.” He’s also tied financially to much of that industry, since Nvidia has become a supplier, investor, lender and partner to scores of AI companies.

Which brings us to the question for investors: what does this mean for the stock?

Luke Lango was already cautious on Nvidia before the official resignation

In Tuesday’s Innovation Investor Daily Notes – before Huang’s resignation was announced – our technology expert Luke moved Nvidia to a Hold.

Here was his reasoning:

The business hasn’t changed, but the facts around it have, and they keep getting worse.

He then pointed to what worried him most – Washington’s response and the risk to Nvidia’s China business:

That gives Washington every reason to tighten export rules and second-guess Nvidia’s China business…

Even if he keeps his job, the damage is done. Big customers like Meta, Amazon, Microsoft and Alphabet were already building their own chips, and now they have more reason to push Nvidia on price and depend on it less. 

The timeline ahead is worth noting.

Nvidia reports earnings Tuesday, Nov. 17 after the market close, and House lawmakers have requested a closed-door briefing with Huang for the following day, though it’s unclear whether that still stands now that he’s out.

But if that meeting holds, investors will be hearing about Nvidia’s quarter and the Huang fallout almost at once.

Luke’s approach: patience, not pessimism

Regular Digest readers know that Luke – normally one of our most enthusiastic voices on AI – has been tactically careful in recent weeks.

He’s still an AI bull. But his concern is that the midterm elections could slow data center rollouts, which would pressure the earnings of AI infrastructure names.

That’s why Luke built a game plan around levels, not a forecast. Yesterday’s rally was a test of it.

The three levels he had been watching were the VanEck Semiconductor ETF (SMH) reclaiming $504, the Philadelphia Semiconductor Index (SOX) reclaiming its 50-week moving average near 10,300 and the Invesco QQQ Trust (QQQ) holding its 200-day moving average near $681. As of yesterday, all three had been hit. And as I write on Thursday, they’re still holding (though SMH by a thread).

Here’s Luke from yesterday’s Daily Notes – and notice that he isn’t dismissing the rally:

We think this rally could be the “real deal.”

As you know, we moved mostly to the sidelines on the AI data center trade last week on the idea that the AI Boom was going through a difficult transition from “spend at all costs” to “stable spending.”

We maintain that caution today. We are not out of the woods yet…

In other words, Wednesday brought the AI trade to the doorstep of Stage 2 – a partial, selective re-entry. But he made a critical distinction:

Stage 2 isn’t about touching those levels. It’s about holding them…so Friday’s close is the first real test.

That distinction matters, because it makes any single day’s action almost beside the point. Whether AI stocks finish today higher, lower or somewhere in between, what counts is whether those levels hold, and Luke is looking at Friday’s close.

We’ll keep you updated as this situation – and Luke’s analysis – evolves.

Circling back to Nvidia, legendary investor Louis Navellier sees it differently

We could summarize his take as simply “hang in there.”

The legendary investor has been a huge NVDA bull for years, and he’s up nearly 4,000% on the stock in his Growth Investor portfolio – even with the recent selloff.

In a quick update this morning, he called the news “shocking,” but his focus was on what comes next:

Obviously, Jensen’s a spokesperson for AI. He’s worth billions to other companies… In the meantime, Elon wants him. So, it’s going to be interesting to see where he pops up.

In the meantime, NVIDIA has its earnings about to be announced. Sales are supposed to be up 91%. Earnings are supposed to be up 90%. The guidance is going to be key.

So, I would hang in there with the earnings. Let’s reassess the situation and look at the guidance. The stock is literally trading at nine times forecasted earnings for next year.

So, Louis isn’t telling you to ignore the scandal. He’s saying the business and its numbers will get the final word, and those arrive next Tuesday.

This is classic Louis…

While the headlines and the fear dominate the conversation, he keeps his eye on the one thing that ultimately moves a stock: earnings.

It’s the same message he delivered Wednesday as the market rebounded:

Now that earnings are coming out, the market’s clearly thinking.

Clearly, the order backlogs are astonishing, and there’s no reason not to be invested right now.

Of course, “earnings” and Louis’ optimism aren’t green lights to own anything – not every stock deserves your money. As Louis put it earlier this week, “the key is owning the right stocks.” And for Louis, the right stocks are the ones with the fundamental strength to deliver the kind of numbers Nvidia is expected to post.

At his live presentation earlier today, Louis showed exactly how he finds them with his Stock Grader. It rates more than 6,000 stocks from A to F on fundamentals like sales growth, earnings growth, and institutional buying pressure, which is how he separates companies with real earnings power from the rest.

This afternoon, Louis revealed a new way he’s putting Stock Grader to work, one designed to help you find opportunities and avoid potential losers without having to predict where the market goes next.

He also shared two free stock recommendations, one to buy and one to avoid. If you missed it, you can watch the free replay right here.

Now, being selective matters for another reason, too…

The Fed.

Rate hikes, inflation, and Friday’s PPI

For yet another reason why selectivity matters in today’s market, we can add a new item to the list…

The potential for a 50-basis-point rate hike next month.

As we covered earlier this week, Tuesday’s Consumer Price Index (CPI) report showed prices rising 0.4% in October, hotter than the 0.3% economists expected. Core prices, which exclude food and energy, rose 0.3% against 0.2% expected.

As to the effect on the Federal Reserve’s interest rate decision in December, let’s go back to Louis:

Some people are calling for 50 basis points, other people are calling for 25, but they will be raising rates because market rates went back up in the wake of [Tuesday’s] CPI.

Now, we’re going to have a Producer Price Index report on Friday. We’ll see what those details are.

But because the CPI has key components that go into the PCE, the Personal Consumption Expenditures Index, that the Fed relies on, we know they’re going to have to raise rates.

Some context on Louis’ comments…

On Monday, no one had been expecting a half-point move according to the CME Group’s FedWatch tool. But after Tuesday’s CPI report, those odds jumped to 11%. As I write on Thursday, they’ve eased slightly, but still clock in at nearly 9%.

Source: CME Group

And that brings us to tomorrow’s Producer Price Index (PPI) report. It tracks what businesses receive for their goods and services; essentially inflation at the wholesale level.

In the prior report, September’s PPI jumped 1.3%, its biggest monthly gain since March 2022. Energy drove most of that increase, with gasoline prices up 20.3%.

If tomorrow’s reading runs hot mostly because of energy, which can reverse quickly (oil dropped sharply after the election), that’s easier for the Fed to look past. But sticky inflation in services would be harder to dismiss.

Wrapping up

Between tomorrow’s PPI report and Nvidia’s earnings next Tuesday, the next week should tell us a lot about where this market goes from here.

The PPI will also feed into the Fed’s December decision, which we’ll be watching closely in the weeks ahead.

In the meantime, we’ll keep you updated as the NVDA/Huang drama evolves.

Have a good evening,

Jeff Remsburg