Summary

  • Baird said it downgraded Nvidia to neutral from buy and cut its price target by 60% to $200 from $500.
  • Baird said some Asia-based inventory tied to Chinese demand could face as much as $5 billion in write-downs, and that additional export restrictions could affect revenue and inventory.
  • Dan Ives said Nvidia’s market value could fall 30% if Huang steps down, and that the company’s AI success and growth strategy depend heavily on his remaining CEO.

Forecast Trend Report by Period

Wall Street is reassessing Nvidia as controversy surrounding Chief Executive Officer Jensen Huang weighs on the company’s management outlook and revenue prospects. Baird cut its price target by 60%, while Morgan Stanley removed Nvidia from its top-pick list.

Business Insider reported on November 11 that Baird downgraded Nvidia to neutral from buy and cut its price target to $200 from $500. The firm cited difficulty in forecasting the earnings impact of uncertainty over Huang’s future, a U.S. government investigation and the risk of additional export restrictions.

The reassessment stems from controversy over Huang’s ties to Alice Huang, an executive at Singapore data-center company Megaspeed. Allegations have also emerged that Alice Huang has links to Chinese intelligence agencies. Baird analyst Tristan Gerra wrote that the firm would keep its neutral rating until uncertainty eased around possible U.S. government action, the outcome of investigations, the revenue impact, potential costs and Huang’s future as CEO.

Baird also highlighted the possibility that China’s access to advanced AI chips through Southeast Asia could face additional restrictions. Chinese companies have been using Nvidia graphics processing units, or GPUs, through data-center operators in Singapore and Malaysia, and tighter controls could hit related revenue and inventory. Gerra estimated that inventory in parts of Asia tied to Chinese demand could face write-downs of as much as $5 billion.

Morgan Stanley also removed Nvidia from its top-pick list. It maintained an overweight rating and a $300 price target. Analyst Joseph Moore said Nvidia shares have fallen 25% since the stock was added to the firm’s top-pick list on October 2.

Moore maintained his view that investment in AI infrastructure will remain strong over the long term, while cautioning that management uncertainty remains a risk. “We acknowledge that near-term uncertainty could persist,” he said. “Huang’s leadership is central to determining Nvidia’s strategic direction.”

Some on Wall Street see Huang’s departure as an even bigger threat to valuation. Yorkville Ives analyst Dan Ives said Nvidia’s market value could fall 30% if Huang steps down. “Jensen Huang is Nvidia’s core DNA,” he said. “The company’s AI success and growth strategy depend heavily on his remaining CEO.”

YM Lee