This Quip Attributed to Former Berkshire Hathaway CEO Warren Buffett Is Useful When Thinking About Nvidia's Future

Nvidia (NVDA -2.27%) is in a bit of a mess right now. Jensen Huang stepped down as president, chief executive officer, and a member of the board this week after reports of extramarital affairs surfaced, including one with an alleged Chinese spy. Some people view Huang as one of the primary reasons for investing in Nvidia stock.

However, there’s one investing gem attributed to one legendary CEO that is useful to ponder at this time. Former Berkshire Hathaway (BRKA +0.47%) (BRKB +0.67%) CEO Warren Buffett has denied he ever said it, but he’s often credited with saying that it can make sense to invest in companies that a “ham sandwich” could lead, meaning partly that their success isn’t tied to any one person.

Can a ham sandwich run Nvidia?

Investors should look at every company they own and determine if the company could be successfully run by someone else, or if the current leader is integral to the company’s success.

Two examples of a business that may not be able to be run by anyone else are Tesla and SpaceX. Both of these are run by CEO Elon Musk, who may be a controversial figure, but is seen by many as one of the brightest technological minds in the world.

Some may say the same thing about Huang, who was one of Nvidia’s co-founders and had led the company from the start. That means he steered it to develop GPUs meant for data centers and AI, which allowed Nvidia to become the world’s largest company at one time. He also oversaw Nvidia developing class-leading technology and maintaining its advantage over the competition as they improved their technology.

The question now that Huang has resigned is (with no offense to the current and future leaders of Nvidia): Could a ham sandwich run Nvidia, or does it require Jensen Huang at the helm to succeed?

The market is worried about Nvidia’s future

At its peak, Nvidia’s market cap was nearly $5.8 trillion. On Sunday, Nov. 8, Huang sent a note to Nvidia employees admitting “I was unfaithful to my wife.” On Wednesday, Nov. 11, reports were circulating that the company’s board was going to oust him. On Thursday, Nov. 12, his resignation was announced. On Friday morning, the stock had a market cap of $4 trillion.

That clearly conveys that the market doesn’t believe a “ham sandwich” could run Nvidia. But is that a fair assessment?

Nvidia already has visibility into next year’s revenue growth, with it expecting 70% growth next year. That means that business has already been locked in due to insatiable demand from the AI hyperscalers. Without Huang leading Nvidia next year, I don’t think the business will be affected, as most of that revenue is locked in.

I think overall that the AI build-out demand is so high that a ham sandwich could run Nvidia right now, and Nvidia can be scooped up for cheap right now because the products are basically selling themselves.

The biggest question is what will happen in the next few years. It comes down to what products are being developed, and that’s where Huang really shone.

If Nvidia chooses a tech-focused person to lead the company next, then I think the stock will be just fine. However, investors should be concerned if Nvidia goes with someone who is more keen on optimizing profits rather than driving innovative technology.