My NVDA Plan!
In the early 2020s, everyone was talking about smart tech. We already had smart TVs, smart phones, smart appliances. But what powered those devices? A very quick google search led me to the answer: semiconductors.
My next Google search: Who makes the chips that power all this tech? One name kept coming up: NVIDIA.
I did a little research and made an investment. September 13th, 2022 marked my first of a total of 61 investments in NVDA up until 11/12/36 - yup, right in the midst of the Jensen Huang scandal. I bought it at $155.58.
My initial plan was to hold NVDA for at least 10 years, but definitely longer assuming everything worked out.
Despite Jensen resigning, my thoughts on NVDA haven’t changed.
I’m not in the camp of there is only one person capable of being CEO of a company. Jensen was great. He co-founded the company. He was the only CEO for 33 years. But now we’re realizing - he wasn’t perfect.
The thing about this scandal isn’t just that he had an affair, but that it is now a matter of national security. The U.S. was trying to win the AI arms race. What secrets might he have shared? What confidential information might he have let slip? To be clear, we don't know that any NVDA technology or confidential information was actually compromised. That's precisely what investigators need to figure out. It’s bad. It’s concerning. But I don’t believe it’s the end of NVDA.
But this doesn’t change the fact that NVDA is a real company selling real products.
I believed in NVDA then, and I still do.
Colette Kress is now the interim CEO. She's inheriting a mess, but she's also inheriting one of the most valuable technology businesses in the world. Her job now is to stabilize the company, restore confidence and keep the business moving forward.
Jensen’s departure is a hard reset, but according to Colette, it’s business as usual (minus the affairs and potential national security risk).
I know a lot of people think without Jensen, the company will collapse. But remember, NVDA is more than Jensen. They've got around 42,000 employees, including 31,000 people working in research and development. Think about that for a second. NVIDIA isn't one guy in a leather jacket. It's an enormous technology company with engineers, executives, developers, customers and partnerships that don't disappear when the CEO leaves.
I don’t imagine a world in which everyone suddenly abandons NVDA because of this scandal. I do imagine a world where it takes some time to win back people who have been burnt, but I don’t see a mass exodus. But at the end of the day, scandals aren’t new, people are short sighted, and we tend to apologize, settle lawsuits, and move on as if nothing ever happened.
As long as revenues keep growing, let’s be honest, that’s all Wall Street really cares about.
Now, I'm not dismissing any of this. This is serious. We have national security questions, potential regulatory issues, shareholder lawsuits and a major leadership transition. I'm not pretending these are minor inconveniences. But there's a difference between a company experiencing a major crisis and a company whose underlying business is fundamentally broken. I don't believe we've established the latter.
So, here’s what I think happens …
They will acknowledge the seriousness of the situation Jensen put them in.
The cause of the issues has removed himself from the center of the controversy and from the company.
They'll likely face lawsuits, and I wouldn't be surprised if some of those get settled.
They'll cooperate with investigators, comply with whatever legitimate government oversight is required, and hopefully put stronger safeguards in place.
And then Colette will hit the gas and it’ll be full steam ahead.
Does this mean I’m buying more? No. I have enough NVDA stock. And we don’t know what chips may fall during the hearings, investigations, etc. But I’m also not selling any of my stock. My thesis on the company hasn’t changed. I can ride out short term waves. And it only makes up 11.5% of my portfolio, so I’m not overexposed to risk.
But if you’re a new investor sticking mostly with ETFs and you have a very small handful of stocks and NVDA makes up less than 10% of your individual stock portfolio, I see very little risk in scaling in very slowly if you wanted to.
If NVDA represents 1-5% of your individual stock portfolio, even a complete loss of that position wouldn't destroy your portfolio. You'll also have some indirect NVIDIA exposure through ETFs, depending on what you own. And no, I wouldn’t worry about your ETF portfolio risk either - this article explains why. That's why diversification matters.
New investors have this idea that they’ll buy it at a set price. If it drops to $150, $125, $100 - then and only then will they buy. In my opinion, unless you already have large NVDA exposure and don’t necessarily need more shares, but would pounce on an insane opportunity, a game like this is actually stupid.
Nobody knows where NVDA will go. A few weeks ago, after the big CoreWeave sell off that brought AI stocks down, I thought, well, this is probably the bottom, so I’ll buy more NVDA. A few days later, the affair news broke and I bought a little more.
Nobody knew that would happen, and if it hadn’t happened, we’d probably see NVDA and the AI sector moving higher this week into NVDA’s earnings on 11/17.
If you believe in a company's long-term potential, don't obsess over trying to find the absolute bottom. You might buy at $170 and watch it fall to $160. That's investing. Your goal isn't to time the perfect entry or avoid ever having a losing position. That's impossible. Your goal is to build positions in businesses you believe have long-term potential, manage your risk and average in over time.
So, relax, stay diversified, stop trying to time fantasy entry points, don’t worry about every headline, manage risk, and don’t let any one position carry more than 15-20% of your total portfolio - that exposes you to extra risk, because no stock is a sure thing and at any point, we can see a stock collapse due to high debt, crumbling sales, or even a horny CEO who hooked up with an alleged Chinese spy.
