Time was that earnings reports from chip giant Nvidia provided moments of celebration for the extraordinary success of a U.S. original who led it for 33 years.
Nvidia NVDA became the world’s most valuable company (until recently) because its graphical processing chips made artificial intelligence possible and has set off the massive wave of data center development around the world.
The results for the company’s third fiscal quarter, to be reported after the market close on Nov. 17, will be terrific, at least on the surface. Nvidia’s revenue should be around $109 billion, up nearly 50% from a year ago and up about 13% from the second quarter, according to Opening Bell Daily.
Earnings per share are expected to hit $2.48, up from $1.30 a year ago and 11.7% from the second quarter.
Read More: Jensen Huang was ‘broken and shattered’ in final hours as Nvidia CEO
Would that the earnings and the analyst call that follows were so simple.
Nvidia and its investors have been going through a major soul-wrenching since Oct. 29, when The New York Times reported on CEO and co-founder Jensen Huang’s involvement with Alice Huang, a woman whom intelligence officials believe was a Chinese spy. Then, reports broke that Jensen Huang had had affairs with two company employees.
Nvidia shares rose nearly 4,000% between the end of 2019 and its closing peak of $239.24 on Oct. 6, making Jensen Huang a rock star among corporate bosses — and a confidante of President Donald Trump.
But it all ended with his resignation on Nov. 12.
Shareholders take a big hit
Nvidia’s shares are off 24% since the Oct. 29 story broke. Worse, they’re off 33% since reaching a 52-week high of $243.37 on Oct. 6. When the shares closed that day (at $239.24), they were up 28.3% for the year.
And as of Nov. 13 (when the stock fell 2% to $162.85), Nvidia is down 12.7% for the year.
No fewer than nine investment houses downgraded their opinions on the stock. Two cut their price targets.
More Nvidia:
Nvidia faces a big week of scrutiny
Nvidia will demand attention and not just because Jensen Huang is no longer CEO. The earnings call will be run by interim CEO Colette Kress, who has been Nvidia’s executive vice president and chief financial officer since 2013.
In addition to questions to interim CEO Kress about the company’s outlook, analysts may well probe:
The China spying scandal. Jensen Huang’s involvement with Alice Huang is an issue because she was an executive at Megaspeed, a company in Singapore that bought Nvidia chips and related equipment and software ostensibly for distribution in South America.
