Jim Cramer, the outspoken host of CNBC's Mad Money, didn't hold back on Thursday. He launched a fierce critique against former Nvidia CEO Jensen Huang, accusing him of endangering the company's future. Huang stepped down that morning amid revelations of multiple affairs with Nvidia employees. One of these affairs reportedly involved an executive at a Singapore-based firm.
After Huang's resignation, Colette Kress, who has been Nvidia's CFO for a long time, was named as interim CEO. Nvidia's shares took a nosedive, closing down more than 4% on Thursday and hitting a morning low of over 14%. This contributed to a 12% loss for Nvidia so far this year. Yet, Cramer insisted that Nvidia's future isn't solely tied to Huang. Huang was instrumental in turning Nvidia into a global AI powerhouse.
But Cramer didn't just criticize. He showed faith in Kress's ability to lead Nvidia through these turbulent times. He commended her deep understanding of Nvidia's operations and finances, suggesting her leadership might bring a more disciplined approach to how capital is allocated. Under Huang, Nvidia had built a large equity portfolio, including investments in companies like Intel and AI cloud provider CoreWeave.
During a livestream with CNBC's Investing Club, Cramer shared past conversations he'd had with Kress. He had argued for cutting Nvidia's stakes in Intel and CoreWeave. Huang, however, had opted to hold onto these investments. Now, Cramer sees a chance for Nvidia to potentially cash in on these holdings, using the proceeds for bigger stock buybacks.
Amid the leadership turmoil, Cramer still believes in Nvidia's strong business fundamentals. He pointed out the company's hefty cash reserves and expected a solid earnings report on Tuesday evening. But he warned that even strong quarterly numbers might not completely alleviate investor concerns, given the ongoing investigations into Huang's actions and possible breaches of U. S. chip export laws.
These probes could result in sanctions, which might affect Nvidia's global business. Meanwhile, rivals like Advanced Micro Devices (AMD) are pushing forward with their own AI chip technologies, challenging Nvidia's market leadership. AMD shares jumped nearly 6% on Thursday, marking their fifth straight session of gains.
Cramer advised caution with Nvidia stock, especially after the substantial returns it has provided his Charitable Trust portfolio over the years. On Tuesday, as Huang's position at Nvidia became uncertain, the Club downgraded Nvidia to a hold-equivalent rating. Cramer suggested shareholders consider taking some profits to protect against further declines.
However, he also advised against completely abandoning Nvidia. He highlighted the company's significant engineering talent and long-term product plans as reasons to believe it can stay competitive in AI without Huang. Drawing a parallel to Apple's transition from Steve Jobs to Tim Cook, Cramer suggested that Nvidia might benefit from a similarly adept successor who could maintain the company's technological edge while offering a different management style.
As Nvidia navigates these uncertain times, its future will likely depend on how well it adapts to new leadership and external challenges. With Kress leading the way, investors will be keenly observing how Nvidia leverages its strengths and tackles potential risks in the fast-evolving AI industry.
