Nov 11 (Reuters) – Baird issued a rare downgrade of Nvidia and Morgan Stanley dropped the stock from its Top Pick list on Wednesday as investor concerns mounted over CEO Jensen Huang’s future at the company central to the AI boom.
Huang’s reported affair with a Chinese businesswoman alleged to be a spy for Beijing has triggered an internal board investigation, an FBI inquiry and calls in Washington for him to step down, raising fresh questions about Nvidia’s dependence on its CEO and the company’s China chip ties.
Baird downgraded Nvidia’s rating to “neutral”, citing limited visibility into 2027 data-center spending, potential demand softening after years of breakneck AI investment and uncertainty over Huang’s tenure beyond next year.
Morgan Stanley removed Nvidia from its Top Pick list while maintaining its “overweight” rating. The stock has fallen more than 25% since receiving the designation last month.
“We do acknowledge that the near-term uncertainty will remain, as CEO Jensen Huang’s leadership is crucial to the company’s strategic direction in our view,” Morgan Stanley analysts said in a note.
Nvidia’s shares have been battered by a tech selloff following the Democratic sweep of the US midterms, while investor anxiety over the affair controversy has erased more than $427 billion from the company’s market value over the past two sessions.
The chip giant trades at 11.4 times expected earnings over the next 12 months, compared with 30.40 times for AMD and 16.5 times for Broadcom.
BofA Global Research also removed Nvidia from its US 1 List, and at least three other brokerages, including Wells Fargo and Citigroup, reduced their price targets earlier this week.
Despite the bearish calls, Nvidia remains one of Wall Street’s most favored stocks. The median price target of $314, according to LSEG data, implies about 82% upside from current levels, while 59 of 64 brokerages rate the shares “buy” or “strong buy”.
Earlier in the day, Reuters reported that a military-linked Chinese university on a US trade blacklist obtained Nvidia’s advanced H200 chips through domestic suppliers, highlighting gaps in Washington’s export-control regime.
Political pressure has also grown. Republican Senator Kevin Cramer on Tuesday called on Huang to resign, saying the allegations created an unacceptable national-security risk.
(Reporting by Darshan Kumar, Johann M Cherian and Anhata Rooprai in Bengaluru; Editing by Vijay Kishore and Devika Syamnath)
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