Nvidia Stock—Is the Huang Controversy a Long-Term Risk?

Jensen Probe

Please click here for an enlarged chart of NVIDIA Corp (NASDAQ:NVDA).

Note the following:

• This article is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.  Nvidia is extremely important for the following reasons:
  • Nvidia’s AI chips are the most advanced.
  • No other company can match Nvidia’s software and ecosystem.
  • Nvidia has been bankrolling AI projects at a large number of other companies.
• The chart shows NVDA stock fell below zone 2 (previously support) on the response to the Blue Wave.
• The chart shows NVDA stock has fallen farther on allegations against Nvidia CEO Jensen Huang.
• RSI on the chart shows NVDA stock is oversold.  Oversold stocks are susceptible to a bounce.
• In our analysis, the key question for investors is how Huang’s alleged affair with a suspected Chinese spy will impact NVDA stock over the long term.  Overall, this development is negative for NVDA stock for the following reasons:
  • There is no obvious, strong successor inside Nvidia. Any sustained damage to Jensen’s credibility or leadership creates significant risk for Nvidia.
  • Nvidia’s board has launched an independent investigation with outside counsel. However, given Jensen’s enormous influence and long standing relationships with the board, there are legitimate questions about how effective the investigation will be, notwithstanding the directors’ formal independence.
  • Many China hawks in Washington have long been uncomfortable with Jensen’s close relationships with China and his advocacy for allowing advanced American chips to be sold there.  Jensen has consistently argued that restricting chip exports to China will accelerate China’s efforts to become self-sufficient. His position is that keeping China dependent on American chips and technology is better for the U.S. over the long term.  The suspected espionage connection now raises additional questions about his advocacy, although there is no public evidence that it was improperly influenced.
  • Jensen has been close to President Trump.  In May, when Jensen was initially left off the delegation accompanying Trump to China, President Trump personally intervened and brought him along.  President Trump has continued to defend Jensen.
  • Democrats have won control of both chambers of Congress and will take over in January.  Congressional investigations into Jensen, Nvidia’s China relationships, and the Trump administration’s handling of the matter are increasingly likely.
  • Even Republican China hawks are not giving Jensen a pass despite his close relationship with President Trump. Three Republican committee chairmen have already requested a closed door congressional briefing.
  • Aside from President Trump, Jensen does not appear to have strong political allies to protect him from bipartisan scrutiny.
• This morning in the early trade, money is flowing out of NVDA and into Advanced Micro Devices (AMD).  The belief is that AMD is a beneficiary of troubles at Nvidia.  
• To challenge Nvidia further, Alphabet Inc Class C (GOOG) is introducing two new TPUs built for AI agents.
• There is optimism in space stocks as NASA plans to spend up to $10B for lunar delivery contracts.  Space Exploration Technologies Corp (SPCX) will be a major contender.  Other contenders include Firefly Aerospace Inc (FLY), Intuitive Machines Inc (LUNR), Lockheed Martin Corp (LMT), Northrop Grumman Corp (NOC), and Voyager Technologies Inc (VOYG).
• The drop in oil this morning is bringing optimism to the stock market in the early trade.  Oil is falling for the following reasons:
  • There are conciliatory indications from President Trump.
  • Qatar has been acting as a mediator.  Qatar’s Prime Minister will meet President Trump today.
  • There is a report that Iran has loosened restrictions on transit through the Strait of Hormuz.
• Consumer Price Index (CPI) will be released tomorrow at 8:30am ET and may be market moving.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis. 

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in Nvidia (NVDA).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals.

The Arora Report is known for its accurate calls. Most recently, we correctly called the rally from recent stock market lows and the 2026 semiconductor decline before a 25% drop in the Semiconductor ETF (SMH). In gold, we bought at an average price near $1,105, close to cycle lows, and took partial profits near $5,400, close to cycle highs. Please click here for our free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.