Nvidia drops 6% more, approaches critical support level

Nvidia shares remain under pressure as uncertainty swirls around CEO Jensen Huang.

The company's founder has acknowledged an extramarital relationship with a woman whom US authorities allege was transmitting intelligence to China. In my view, this situation would likely have been handled differently absent political motivations. Such information would probably have been communicated to him discreetly rather than through media exposure.

The complication is that this makes matters worse.

I suspect the leak was intended to serve a political objective, with the post-midterm timing reinforcing that belief. The apparent aim is to further restrict Chinese ties to Nvidia's chip business, given Huang's strong opposition to chip export controls on China. The implication is that he enabled indirect access to those sales or facilitated connections to vendors offering virtual access, or that he overlooked such activities.

It is improbable that any information he could have shared with an intelligence operative would have been unknown to China regarding manufacturing processes. The current issue is that he is locked in a confrontation with the US government. The chart shows the stock pressing against support established at the March 2026 and September 2025 lows.

A breakdown from this level could target the November 2024 high around $153, or possibly lower.

Nvidia's valuation is a bright spot. The stock trades at 21x trailing P/E, 18x forward P/E, and 10.5x consensus 2028 earnings. For AI bulls, those multiples are compelling. While significant disruption looms in the chip space, Nvidia has its own avenues for innovation in autonomous driving, robotics, and frontier models.

Huang appears to have attempted to challenge the US government on AI policy and is discovering that effort is failing. He will likely backtrack, but all signs suggest he remains a founder with fierce determination to prevail in the AI competition. It would be regrettable if he stepped down.