Nvidia shares seen as undervalued amid leadership scandal, analyst says
A sharp November selloff is pushing Nvidia deeper into a valuation reset as the chipmaker faces leadership turmoil following CEO Jensen Huang's resignation. The decline leaves the stock trading at about 10 times fiscal 2028 earnings estimates, a level Freedom Capital's Paul Meeks describes as unusually cheap.
Highlights
- Nvidia shares declined 20% in November following CEO Jensen Huang's resignation announcement, dropping to 10 times fiscal 2028 estimated earnings.
- Freedom Capital's Paul Meeks views Huang's resignation as a 'market-clearing event,' prompting aggressive buying and characterizing current valuation as 'stupid' low.
- Meeks argues that further U.S. restrictions on China have limited earnings impact while expressing confidence in interim CEO Colette Kress and Nvidia's operational resilience.
Valuation case strengthens after selloff
As reported by CNBC, Freedom Capital head of technology research Paul Meeks says he is buying Nvidia shares with "both hands" as the company’s stock drops during the unfolding scandal tied to Huang’s resignation.Meeks says the resignation announcement is a "market-clearing event" and argues the recent fall has taken the shares to "stupid" valuation levels. He notes Nvidia is trading at just 10 times analysts’ fiscal 2028 earnings estimates after Thursday’s decline.
Nvidia shares are down 20% in November alone, with the stock pressured by the scandal as it develops. Meeks also says the best returns in technology investing during periods like this often come from taking a contrarian stance.
China exposure and management continuity
Meeks says additional U.S. restrictions on Chinese sales would have limited impact on his model because he, like other analysts, already did not include much revenue from China in earnings forecasts.He also expresses confidence in interim CEO Colette Kress, calling her "a rock star" and saying the company will not "miss a beat." That view suggests he sees Nvidia’s operational outlook as more resilient than the current market reaction implies.
Earlier, we looked at the Nasdaq 100 drop amid persistent selling pressure in technology stocks.
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