Nvidia PE falls to 14-year low, but CEO exit and AI worries cloud the bargain

Jensen Huang, CEO of Nvidia, resigned after two extramarital affairs came to light. One of the affairs involved a Chinese businesswoman suspected of working for Beijing's intelligence services. Huang's resignation comes as Nvidia's African AI bet faces a significant test. Cassava Technologies, a Zimbabwean AI infrastructure group founded by billionaire Strive Masiyiwa, is trying to build a GPU cluster in Cape Town, with plans to expand to five countries.

Nvidia supplies the processors and owns a stake in Cassava, giving it a financial interest in the project's success. Cassava's rollout could cost up to $720 million and involve 12,000 Nvidia GPUs. The company has already launched a data centre in Cape Town and is working on projects in Egypt, Kenya, Nigeria, and Morocco. The Nvidia investment in Cassava is crucial because it would provide African companies with a way to rent computing power for training and running AI models on the continent.

South Africa already has an example with Altron's Nvidia-powered facility. However, if Nvidia becomes more selective in its approach, African operators might need to rely more on outside financing or secure large customers before expanding. This development will depend on Nvidia's continued involvement in supplying hardware and software and African operators' ability to make the economics work through local demand, power costs, and pricing.