Jim Cramer, the outspoken host of CNBC's Mad Money, is not holding back his criticism of former Nvidia CEO Jensen Huang. Cramer slammed Huang for actions he claims risked the chipmaker's future. Huang stepped down on Thursday amid reports of affairs with company employees. One of these employees is suspected by U. S. intelligence agencies of espionage.
In the wake of Huang's resignation, Nvidia's shares took a dive. They closed down more than 4% on Thursday, having dipped over 14% at their lowest point during the day. This drop only adds to Nvidia's year-to-date losses, which now stand at 12%. But despite the chaos, Cramer is still optimistic about Nvidia's future. He thinks the company can thrive under new leadership.
Stepping into the breach is longtime CFO Colette Kress, now acting as interim CEO. Cramer is supportive of this move. He commended Kress for her comprehensive grasp of Nvidia's operations and finances. He believes she can offer the stability needed as Nvidia deals with ongoing investigations into Huang's behavior.
Cramer argues that Nvidia's future isn't tied to Huang, who played a crucial role in establishing Nvidia as a global leader in AI technology. Cramer envisions Nvidia becoming more structured and disciplined in its investments. Under Huang, the company made big bets, including a $2 billion investment in AI cloud provider CoreWeave. Cramer has previously encouraged Kress to reassess these stakes, pushing for a more disciplined approach to allocating capital.
The CNBC host sees a chance for Nvidia to profit from some of these investments. This could potentially allow the company to return proceeds to shareholders through increased stock buybacks. Even with the hurdles, Cramer remains confident in Nvidia's fundamental business strength. He points to its significant cash reserves and an expected strong earnings report as reasons for optimism.
However, Cramer warns that even a strong earnings report might not be enough to calm investors amid the current uncertainty. The investigations into Huang's actions and potential breaches of U. S. chip export restrictions could lead to sanctions. This could affect Nvidia's international business. Meanwhile, rivals like Advanced Micro Devices (AMD) are gaining ground with their own AI chips, threatening Nvidia's market dominance. AMD's shares climbed nearly 6% on Thursday, marking a five-day winning streak.
Given these risks, Cramer has taken a more cautious position on Nvidia stock. On Tuesday, as speculation about Huang's future grew, Cramer's Charitable Trust downgraded Nvidia to a hold-equivalent rating. He advised shareholders to think about taking profits to avoid losing gains if the stock continues to drop, as analysts have downgraded Nvidia from buy to hold.
Despite the challenges, Cramer advises against completely abandoning Nvidia. He cites the company's engineering prowess and long-term product roadmap as reasons to stay hopeful. Drawing comparisons to Apple's leadership change from Steve Jobs to Tim Cook, Cramer suggests Nvidia could benefit from a capable successor who keeps the company's technological edge while offering a different management style.
