Because of Huang’s rile in the company, america’s biggest investor Michael Burry, who is famous for predicting the 2008 housing market crash has once again raised concerns about Nvidia’s dependence on CEO Jensen Huang, arguing that the AI chip giant has long faced a significant ‘key-man-risk’. Burry made the fresh comments amid the ongoing scrutiny of Huang. The Nvidia CEO is reportedly facing a broad investigation over the allegations of extra-marital affairs, starting a fresh debate on succession planning at Nvidia and also the company’s ability to seamlessly navigate a leadership transition.
He pointed to reports that the Nvidia chief executive oversaw roughly 60 direct reports and delegated little responsibility, arguing that the company’s heavy reliance on one executive had been a long-standing concern. Gene Munster, managing partner at Deepwater Asset Management, believes that despite the leadership uncertainty, Nvidia’s competitive position remains intact due to the overwhelming demand for AI chips.
In a post shared on social media platform X (formerly known as Twitter) Burry declared that “The Don has fallen,” describing Huang as an “Enforcer” while referencing reports surrounding a Department of Justice probe. “The key-man risk at NVIDIA always was a worry,” Burry wrote, while expressing scepticism that chief financial officer Colette Kress could seamlessly assume leadership of the company if required. “I would expect that the stock probably gaps down and then starts to slowly work higher,” he said. “AMD is not Nvidia,” he said, arguing that customers continue to view Nvidia’s processors as offering the best value and performance in the market.
Speaking in an interview with CNBC, Muster emphasised that he initially expected the Nvidia shared to suffer a massive decline amid the on going controversy, but he feels that the investors will ultimately refocus on the business fundamentals of the company. Muster further rejected the idea that rival companies like AMD stand a chance to gain materially from the issues at Nvidia, as Nvidia’s products still remain the preferred choice for major cloud and AI companies. He added that hyperscale customers still cannot obtain enough Nvidia chips to meet demand.
As per Muster, the customers will still prioritise Nvidia’s advanced AI hardware regardless of the fact that who is heading the company. He concluded by saying that business can secure demand “with or without Jensen. Your child uses AI every day. But do they understand it? Find out in the TOI AI Masterclass.