Everyone has been watching NVIDIA $NVDA over the past couple of days. Setting aside the gossip, do you know the three hidden landmines behind this crisis that are keeping Wall Street up at night?
First, the AI world’s central bank is facing a credit freeze. People are focused on the possibility that Jensen Huang could step down, but overlooking NVIDIA’s commitments of up to $400 billion in guarantees and revolving credit.
NVIDIA has lent money to up-and-coming cloud providers such as CoreWeave so they can buy its chips, effectively underwriting its own growth. If its leader is forced out and NVIDIA’s market value continues to shrink, these computing-power newcomers—heavily dependent on NVIDIA’s financial support—could immediately face the risk of default. The entire AI financing chain could be drained along with them.
Second, the consequences of extreme centralization are coming to a head. NVIDIA has no board chair, many of its independent directors have served for nearly 30 years, and Jensen Huang directly manages more than 60 executives. This structure can be highly efficient in favorable times. But now, amid revelations of an affair with subordinate Kimberly Powell and a national security investigation involving executives at major customers, this lack of checks and balances has suddenly become the company’s biggest vulnerability.
Third, the giant’s grip is loosening, and Google and Broadcom are picking up the pieces. While the financial world generally believes this won’t trigger a repeat of the 2008 financial crisis, a shake-up in the industry is already underway. The market now sees this as a crisis specific to NVIDIA, and capital is flowing ever faster toward Google’s TPUs, Broadcom, and AMD.
If NVIDIA fails to present a convincing governance plan on next week’s earnings call, the gains from its monopoly on computing power may well peak ahead of schedule.
#黄仁勋再被曝与下属婚外情，或遭董事会罢免 #英伟达Q3财报将至：能否化解市场疑虑？ $NVDAB
First, the AI world’s central bank is facing a credit freeze. People are focused on the possibility that Jensen Huang could step down, but overlooking NVIDIA’s commitments of up to $400 billion in guarantees and revolving credit.
NVIDIA has lent money to up-and-coming cloud providers such as CoreWeave so they can buy its chips, effectively underwriting its own growth. If its leader is forced out and NVIDIA’s market value continues to shrink, these computing-power newcomers—heavily dependent on NVIDIA’s financial support—could immediately face the risk of default. The entire AI financing chain could be drained along with them.
Second, the consequences of extreme centralization are coming to a head. NVIDIA has no board chair, many of its independent directors have served for nearly 30 years, and Jensen Huang directly manages more than 60 executives. This structure can be highly efficient in favorable times. But now, amid revelations of an affair with subordinate Kimberly Powell and a national security investigation involving executives at major customers, this lack of checks and balances has suddenly become the company’s biggest vulnerability.
Third, the giant’s grip is loosening, and Google and Broadcom are picking up the pieces. While the financial world generally believes this won’t trigger a repeat of the 2008 financial crisis, a shake-up in the industry is already underway. The market now sees this as a crisis specific to NVIDIA, and capital is flowing ever faster toward Google’s TPUs, Broadcom, and AMD.
If NVIDIA fails to present a convincing governance plan on next week’s earnings call, the gains from its monopoly on computing power may well peak ahead of schedule.
#黄仁勋再被曝与下属婚外情，或遭董事会罢免 #英伟达Q3财报将至：能否化解市场疑虑？ $NVDAB
