Last week, social media exploded as an anonymous blogger published some striking claims about Nvidia (NASDAQ:NVDA). A blog called “The Mad King” released a treatise claiming that the tech darling has inflated its demand figures and provided misleading information regarding its graphic processing units (GPUs).
A social media outcry quickly ensued as retail investors and experts alike rushed to look into this allegation. The news didn’t directly impact NVDA stock, but it certainly led to some heavy speculation regarding how accurate its growth prospects really are.
Experts have spoken out against The Mad King’s claims, dismissing them as inaccurate. Bernstein Senior Analyst Stacy Rasgon has helped lead this charge, making the case that investors shouldn’t short NVDA stock, regardless of how much attention these “conspiracy theories” are attracting. But as it turns out, a few days after the report went live, Nvidia addressed one of the topics it centers around.
What’s Happening With NVDA Stock
It’s true that this week isn’t off to a good start for NVDA stock. As of this writing, shares are down 2% for the day, continuing the volatility that they experienced last week. However, this can likely be attributed to negative market momentum. Most tech stocks are struggling today, and the ones that are in the green aren’t up by a lot.
But that doesn’t mean that the claims against Nvidia aren’t worth discussing, especially as the company has recently addressed them. As InvestorPlace reported:
“The report discusses a company called Coreweave, named as an Nvidia client responsible for many GPU orders. The post cites multiple X/Twitter posts that allege suspicious activity between the two companies — on the grounds that Coreweave has taken loans from BlackRock (NYSE:BLK), one of Nvidia’s top shareholders.”
Last week, Colette Kress, Nvidia’s executive vice president and CFO, spoke at Citi’s 2023 Global Technology Conference. She praised Coreweave’s speed of adoption, noting that Nvidia has a “very small, minority passive investment” in the company. Kress added, though, that Coreweave has worked with many other big tech firms. “They did have some allocation, but again, it’s very small,” she stated.
Kiress seems to be implying that Coreweave’s contributions to Nvdia’s GPU sales are too small to be significant. If that is the case, it would certainly disprove what The Mad King has argued. Her take is certainly similar to what Rasgon argued. In a note to clients, the analyst wrote that Nvidia didn’t need the help of Coreweave or any other customer to “juice the quarter,” citing its impressive results.
Why It Matters
As of now, it is increasingly looking like the Mad King’s theories don’t hold water. If that’s true, this social media fad will quickly blow over and won’t impact NVDA stock in the long or short term. The accusations made in the report are severe and if proven correctly, they would have implications that span far beyond the company at fault.
But more and more evidence is suggesting that Coreweave is not as closely linked to Nvidia as the conspiracy theorists supporting it seem to believe. If any evidence is found to support these claims, regulators will likely step in. But until then, investors shouldn’t assume there is any reason to bet against the year’s breakout stock.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
