Nvidia handed downgrade on Jensen Huang and AI uncertainty

Detailed summary

Baird gave Nvidia a rare downgrade on Wednesday, as chief executive Jensen Huang's alleged affair with a Chinese spy casts doubt over his tenure.In a note, Baird analyst Tristan…

Baird gave Nvidia a rare downgrade on Wednesday, as chief executive Jensen Huang's alleged affair with a Chinese spy casts doubt over his tenure.

In a note, Baird analyst Tristan Gerra more than halved the chip maker's target from $500 to $200. Mr Gerra delayed his forecasts for data centres in 2027, saying supply issues are “mostly behind a potential slowdown, alongside potential demand softening”. AI hyperscaler capital expense could also slow to 40 per cent growth or slightly less for 2027, he said.

Baird downgraded Nvidia stock to neutral, while a separate analysis from Morgan Stanley removed it as a top pick.

Nvidia was trying to rally after a difficult period for tech-related stocks.

Shares in the chip bellwether rebounded on Wednesday as CoreWeave's better-than-expected quarterly results lifted other chip stocks. Nvidia shares opened 2.48 per cent higher on Wednesday at $172.68 a shares, after closing 5 per cent higher in the previous session.

However, shares in Nvidia are on track for a sixth consecutive losing week. The company's stock is down about 8 per cent for the year.

Mr Huang admitted to an extramarital affair in a letter to employees on Sunday.

“To my colleagues at Nvidia, including those I have worked alongside for decades, and to our board, partners and shareholders around the world: you deserve better from me. Leading Nvidia is the privilege of my life. My responsibility is to serve you and be worthy of your trust. I have fallen short of that responsibility. I am fully committed to Nvidia and will work to earn back your confidence,” he wrote.

Nvidia's board of directors has launched an investigation into the affair, adding that Mr Huang fully supports the review and is committed to co-operating with it.

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