Wall Street's Only Nvidia Bear: Ousting Jensen Huang 'Would Be a Mistake'

Seaport Research analyst Jay Goldberg — the only one of 73 Wall Street analysts covering Nvidia with a sell rating — says forcing out CEO Jensen Huang over the China spy scandal "would be a mistake for everyone involved."

Goldberg laid out his argument in a note to clients, first reported by MarketWatch. He wrote that "there is an organized political campaign against" the head of one of the most critical companies in the artificial-intelligence industry.

Huang's ties to China face mounting scrutiny. After a report in the New York Times late last month, Huang admitted to an affair with Alice Huang, whom U.S. intelligence reportedly believes was an intelligence asset for China. She is not related to Jensen Huang. The alleged operation involved a former executive of Singapore-based cloud provider Megaspeed. Nvidia's board has opened an independent investigation into whether Jensen Huang was the target of a foreign intelligence operation.

What turned Washington against Huang?

Over the last two years, Huang cultivated the Trump administration, even though some in Washington wanted to disrupt a major part of Nvidia's business. Goldberg suggests those efforts started to backfire.

"Over the past year, there has been extensive coverage from Washington over growing rivalry and resentments around his ties to the President," Goldberg wrote. Huang stood at President Donald Trump's side for key events, including his meeting with Chinese President Xi Jinping earlier this year.

The policy backdrop sharpened the tension. As the Trump administration looked to continue the Biden administration's strict regulations on Nvidia chip shipments to China, Huang became a fixture in Washington. Last spring, Trump banned Nvidia's sales of its export-control-compliant low-power alternative chips to China. He then reversed the decision and said the company could sell its advanced H200 chips to the country if the U.S. got a cut of the profits.

Megaspeed is not the only Nvidia customer under scrutiny. Earlier this year, federal prosecutors charged a co-founder of Super Micro Computer and two other individuals connected to the server maker with conspiring to bring Nvidia's advanced chips to China. The co-founder, Yih-Shyan "Wally" Liaw, pleaded not guilty. One other individual pleaded guilty. Nvidia was not accused of wrongdoing in the case.

Why does Goldberg think Huang is irreplaceable?

Goldberg said it is unclear how accurate the reports are that some Washington officials resent Huang's strong ties to the White House. But if they prove true, he thinks "there may be further bad news to come."

The analyst reiterated that while he doesn't agree "with all [of Huang's] initiatives," he doesn't see "anyone who could readily replace" him at Nvidia.

Goldberg points to two structural reasons. First, Huang has been able "to make bold moves" — including massive investments into neoclouds such as CoreWeave, which buy Nvidia's graphics processing units and resell the computing power to their own customers.

Second, Nvidia runs a flat management structure. Huang has dozens of direct reports. That structure gave the company an advantage by cutting through layers of managers, but it "comes at the cost of him being involved in every major decision within the company," Goldberg said. Remove the man at the center of that web, and the decision-making machinery has no obvious operator.

What happens next?

Goldberg said Huang and Nvidia face the risk of a "political climate" that could lay the groundwork for the CEO to step down. That outcome, he argues, would create "a major problem for the company."

The board's independent investigation is the immediate checkpoint. Its findings will shape whether the political pressure on Huang hardens into a governance crisis, and whether Nvidia's most bearish analyst on the Street turns out to be right about the cost of losing him.