Who will replace Jensen Huang? Here's our early thoughts on the search for Nvidia's next CEO
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are showing resilience on Thursday as investors grappled with the fallout from Nvidia CEO Jensen Huang’s resignation amid a widening affair scandal. The S & P 500 is down about 0.25% in afternoon trading. By sector within the S & P 500, energy, communication service, and utilities, consumer staples, and consumer discretionary outperformed. Meanwhile, materials, industrials, and information technology were weaker. Oil is moving back up after President Donald Trump said on Truth Social that the U.S. doesn’t need to make a deal with Iran, claiming “we’ve got their Strait,” in reference to the Strait of Hormuz. This suggests the risk of renewed tensions in the Middle East may be higher than the reconciliatory tone expected after the Republicans’ midterm losses last week. Bond yields spiked again, continuing the move we saw Tuesday in reaction to a hot consumer price index report . The bond market was closed Wednesday in observance of Veterans Day. Shares of Nvidia are down 5% in afternoon trading, well off their early morning lows of roughly $149 apiece. As uncertainty around Huang’s future mounted this week, we downgraded our Nvidia rating Tuesday, and then said Wednesday that we would’ve been buyers of Advanced Micro Devices if our trading restrictions allowed us. Jim Cramer reiterated our interest in buying AMD during Thursday’s Morning Meeting. Huang’s resignation may also explain why hyperscalers with their own internal chip programs — namely Alphabet and Amazon — outperformed in Thursday’s session. Google parent Alphabet, known for its tensor processing units, is up around 2%. Amazon, which has found great success with its Trainium chips, is up roughly 0.6%. The loss of a visionary founder raises plenty of questions about who will lead Nvidia into the next era. Over our many years of owning Nvidia’s stock, listening to every earnings call and following every key corporate event, we’ve come to view CFO Colette Kress as a rigorous and respected leader who is more than capable of keeping the company on the right path and advancing its AI roadmap. She’s a great choice to be the interim chief executive. We’ll see what happens with the board’s search for a permanent CEO across internal and external candidates. But early chatter suggests this position will be highly sought after from the best and brightest of tech leaders. Ian Buck — Nvidia’s vice president and general manager of hyperscale and high-performance computing and the inventor of its linchpin CUDA software — is a favored candidate. Buck is who Jim suggested take over on Tuesday’s “Mad Money,” but upon learning more information about Huang’s relationships over the past 36 hours, an outside candidate may be more appropriate to clean up the mess. In addition to Wednesday’s report in The New York Times about an affair with an executive who reported to him, Reuters on Thursday reported that Huang had an intimate relationship with a second employee , citing unnamed sources. Trump earlier Thursday suggested former Apple CEO Tim Cook as a Huang replacement. We’re obviously huge fans of Cook, but we’re not sure he would be the best fit to lead the chipmaker. We’ve also seen the leaders of the cloud units at Alphabet and Amazon mentioned as possible candidates. Additionally, Palo Alto Network CEO Nikesh Arora’s name was floated around on “Squawk on the Street” earlier. He’s a bankable executive known for dealmaking and his name being out there may explain why Palo Alto shares are down 3% Thursday. The bottom line is that Nvidia lost a key person, and the stock is less attractive than it was a week ago. But the technology roadmap has not changed overnight, and leaders and its employee base will rally around the company and products, which remain best of class. This is why we aren’t heading for the exits entirely. But from a portfolio management perspective, on Thursday’s Morning Meeting, Jim advised investors sitting on extraordinary gains to pare their positions as part of investment discipline. After the closing bell on Thursday, Cisco Systems and Applied Materials report quarterly results. There are no major earnings reports scheduled for Friday morning. On the economic data side, we’ll see the October producer price index report. The hot CPI report Tuesday prompted traders to begin pricing in the possibility of a 50 basis point rate hike at the Federal Reserve’s policy meeting next month. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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