Wall Street, Once Saying "Buy Nvidia," Turns Neutral Amid Jensen Huang Affair Scandal

Morgan Stanley Removes Nvidia from Top-Pick List After 25% Stock Drop
"If U.S. Investment Demand Falls Amid Southeast Asia Restrictions, Revenue Impact Could Be Concentrated"

As controversy surrounding Nvidia CEO Jensen Huang continues to drag on, U.S. investment firm Baird downgraded its rating on Nvidia to Neutral and cut its price target from $500 to $200.

Nvidia CEO Huang Jensen and Huang Alice (Chinese name: Huang Le), who has been identified as his alleged affair partner. Social media screenshot.

According to U.S. publication MarketWatch on November 11, Baird analyst Tristan Gerra identified a ban on exports of AI chips to China as a key risk for Nvidia. He estimated that if exports are blocked, the company may have to write down the book value of the chips by as much as $5 billion. Last spring, Nvidia also incurred a valuation loss of a similar scale after the Trump Administration blocked sales to China of AI chips with reduced performance.

“We are downgrading our rating to Neutral due to U.S. government actions and the results of investigations, their impact on revenue, and the future of CEO Huang,” Gerra said. “Even if U.S. regulatory restrictions reduce demand for data centers in Southeast Asia, U.S. demand could make up for much of the shortfall. However, if this coincides with a decline in investment demand from U.S. companies, the impact on revenue could be concentrated.”

On the same day, Morgan Stanley analyst Joseph Moore removed Nvidia from his top-pick list, just over a month after naming it a top pick on October 2. He cited the stock’s drop of more than 25%. However, he maintained his Overweight rating and $300 price target.

Moore expected uncertainty to increase in the short term, given the importance of CEO Huang’s leadership to Nvidia’s strategy. Still, he saw little likelihood of a significant disruption to overall revenue, citing continued strong investment in AI infrastructure and chip demand that exceeds supply.

Investment publication The Motley Fool said, “If Nvidia’s strong earnings continue and the allegations against CEO Huang are not substantiated, the stock could appear undervalued at its current price.” It added, “If earnings forecasts are revised downward, it will prove that Baird’s judgment was sound.”

Nvidia shares rebounded more than 4% to $175.85 around noon on November 11. However, over the previous five trading sessions, they had fallen by the most since September 2022.

This content was produced with the assistance of AI translation services.