Is Nvidia a Bad-News Buy or a Stock to Avoid?

Nvidia (NASDAQ:NVDA) stock has been one of the major winners of the artificial intelligence (AI) revolution. This is because the tech giant has built an AI empire, offering the world’s fastest AI chips, known as graphics processing units (GPUs), and a full portfolio of supporting products and services. AI customers have snapped up Nvidia’s chips, with demand often exceeding supply as the company launches new updates.

All of this has fueled mind-boggling earnings growth, with revenue and profit rising in the double and triple digits. Investors recognized this early in the AI boom, and this helped the stock soar 1,100% from the start of 2023 through the end of last year. This year has been a rockier one for Nvidia and other AI powerhouses as investors turned more cautious on the space. They worried about higher inflation in the U.S. and questioned whether data center spending would continue at current levels.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »

And just this week, particularly bad news concerning Nvidia emerged. Nvidia opened an investigation into chief Jensen Huang’s relationship with a person U.S. intelligence agencies are calling a Chinese spy. Against this backdrop, is Nvidia a bad-news buy or a stock to avoid? Let’s find out.

Image source: Getty Images.

Jensen Huang guides Nvidia’s direction

First, let’s take a step back and consider Huang’s role at Nvidia. He founded the company more than 30 years ago, and over time, he has been at the helm, guiding its direction. Huang made a major bet on AI about a decade ago, deciding to shift Nvidia’s GPU focus to serving that market. Clearly, it was a winning decision. And since that time, he has become the face of AI development, speaking around the globe about the technology today and its future potential.

Huang also has lobbied to bring Nvidia’s chips back to China after a U.S. export ban. He won that battle, with the U.S. permitting the export of certain chips, but China hasn’t yet fully accepted imports. Nvidia has only exported a small number of chips there this year. But this situation brought the U.S./China AI race to the forefront.

All of this demonstrates something big: Huang is the driving force at Nvidia, a leader whose name is known around the world and well beyond tech circles. That suggests trouble for him could equal trouble for the company.