CNBC’s Investing Club cuts Nvidia to hold, declines to buy the selloff

CNBC’s Investing Club downgraded Nvidia to its hold-equivalent 2 rating on Tuesday and is not buying the decline, according to its November 14 article. Jim Cramer remains confident in the company’s technology and management bench, but the club’s caution comes after a week in which leadership turmoil accompanied a nearly 13% fall in Nvidia shares.

The downgrade came before Huang’s reported Thursday resignation. Alexa LoMonaco’s article traces the crisis to reports of a board investigation into his relationship with a woman suspected of spying for China. It recounts subsequent allegations of affairs with two Nvidia employees and says longtime finance chief Colette Kress was named interim CEO. The personal-conduct and espionage allegations are not established findings.

Nvidia’s selloff began Monday as reports of the investigation emerged, the article says. Shares lost another 2% Friday. The weekly decline contrasted with a broader rebound in semiconductor stocks, leaving Nvidia moving against its sector.

A hold, not an exit

Cramer was not abandoning Nvidia. His concern extended beyond its products to whether investors would still want to own the stock without Huang. Speaking Wednesday on Mad Money, he put that risk plainly:

A Jensen-less Nvidia is an Nvidia many will not want to own,

Jim Cramer, Wednesday on Mad Money, as quoted by CNBC’s Investing Club

He also offered a reason not to assume the company would falter under different leadership: Apple’s success after Steve Jobs. Cramer welcomed Kress’s appointment and expressed confidence in her ability to guide Nvidia through the transition.

For longtime shareholders with substantial gains, however, his advice emphasized capital preservation. He urged them to consider taking some profits rather than risk giving those gains back. That advice addressed investors already sitting on large returns, rather than making a blanket call to sell the company.

Nvidia’s next scheduled financial update is its earnings report Tuesday evening, according to CNBC, putting a business checkpoint close behind the reported leadership change.