Key Points
- Jim Cramer warned that this long-standing “own it, don’t trade it” status for Nvidia’s stock could be at risk amid uncertainty surrounding CEO Jensen Huang’s future.
- Cramer remains confident in Nvidia’s technology, but warned that growing opposition to data centers and financing challenges could threaten demand for its AI chips.
CNBC’s Jim Cramer said Monday that uncertainty surrounding Nvidia CEO Jensen Huang and the data center boom has raised new risks for the artificial intelligence chipmaker’s stock. Cramer’s comments follow Sunday’s news that Nvidia’s board is investigating Huang over his extramarital affair with Megaspeed’s Alice Huang, who is suspected by U.S. intelligence agencies of spying for China. Though Huang remains CEO, the investigation has raised questions about his future at the company . “Given the facts of the story, which seem to get worse with each update, we are going to have to consider owning shares in a Jensen-less Nvidia,” the ” Mad Money ” host said. “If that is the case, you can no longer be bound by our ‘own it, don’t trade it’ mantra, which has been the default view of the CNBC Investing Club.” Nvidia shares tumbled more than 4% Monday, even as the broader market rallied, extending a sell-off that has erased roughly 22% of the chipmaker’s value over the past month. Prior to Monday, Nvidia’s decline has coincided with weakness in the broader AI build-out trade. “What you need to know is that Nvidia is a less attractive stock than it was a week ago, even as I think the business remains strong,” Cramer said. “That was true before this weekend’s revelations about spies and affairs, based solely on the election results, but if Jensen’s transgressions mean he can no longer lead this company, that only makes matters worse.” But that doesn’t necessarily mean it’s time to sell Nvidia, according to Cramer, whose Charitable Trust, the portfolio used by the Investing Club, first bought shares of the chipmaker in 2017. It has maintained a consistent position since early 2019. Cramer pointed to Apple’s success under Tim Cook following Steve Jobs ‘ death as evidence that companies can thrive after losing visionary leaders. Cramer’s Charitable Trust has owned Apple for more than a decade. “We are not anxious to dump [Nvidia],” Cramer said about his Charitable Trust, citing what he believes to be Nvidia’s deep management bench and established technological leadership . “I think Nvidia can go forward just on the strength of its multiyear product map,” he added. The increased uncertainty, nevertheless, comes at a challenging time for Nvidia, as political opposition to data centers threatens to slow the massive infrastructure build-out that has fueled demand for its chips and turned the company into one of the world’s most valuable enterprises. Cramer said a potential moderation in data center construction poses greater risks for smaller, heavily indebted neoclouds such as CoreWeave , Nebius and Iren , which rely on outside capital to expand their computing capacity. As of June 30, Nvidia had equity stakes in CoreWeave and Nebius, according to its 13F securities securities filing . In May, Nvidia announced a partnership with Iren that included warrants for up to 30 million shares. “I think these marginal buyers of Nvidia chips may not be able to get the financing they need to build data centers on their own,” Cramer said. Without those companies expanding aggressively, demand for Nvidia’s chips could become increasingly dependent on the spending plans of established hyperscalers such as Amazon and Microsoft . Earlier on Monday, Cramer recommended buying shares of Amazon. Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
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