Nvidia stock faces rare downgrades as board investigates CEO Jensen Huang's admitted affair
Baird downgraded Nvidia to neutral while Morgan Stanley removed it from its Top Pick list amid leadership uncertainty
Nvidia stock remains a buy despite Jensen Huang probe, Adam Johnson says
Bullseye American Ingenuity Fund portfolio manager Adam Johnson explains why Nvidia stock remains a buy despite the boards investigation into CEO Jensen Huang. He argues the companys growth outweighs the executive scandal.
Artificial intelligence giant Nvidia is facing investor scrutiny due to concerns about the company's future amid its internal investigation into CEO Jensen Huang's affair with an alleged Chinese spy.
Huang admitted to being unfaithful to his wife in a statement on Sunday, in which he also said he had fallen short of his responsibilities to the company and said he would cooperate with the investigation.
Nvidia's board of directors initiated an independent probe into the matter, saying that while it has no reason to believe national security or company secrets were compromised, the probe will examine all available information.
The controversy has prompted some firms to alter their assessments of the company's shares, as Baird issued a rare downgrade of Nvidia stock – cutting the AI giant's rating to "neutral" because of a lack of visibility into 2027 data center spending, possible demand softness and uncertainty over Huang's tenure.
SILICON VALLEY IS A 'CENTER FOR ESPIONAGE,' FORMER FBI AGENT WARNS AFTER NVIDIA SPY SCANDAL
Nvidia CEO Jensen Huang said Sunday that he would cooperate with the inquiry and is committed to Nvidia and U.S. national security. (Sean Rayford/Getty Images)
Morgan Stanley also removed Nvidia from its Top Pick list, although the firm retained its "overweight" rating for the stock, which has experienced a price decline of over 25% since it received 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 direction in our view," Morgan Stanley analysts said in a note.
Bank of America Global Research also took Nvidia out of its U.S. 1 List, while at least three other brokerages – including Wells Fargo and Citigroup – reduced their price targets for the stock earlier this week.
SHORT SELLER FLAGGED JENSEN HUANG'S 'UNCOMFORTABLY CLOSE' TIES TO ALLEGED CHINESE SPY MONTHS AGO
Huang co-founded Nvidia and has transformed the company into a leader in the AI race. (Patrick T. Fallon/AFP via Getty Images)
Nvidia shares have been caught in a broader tech selloff after the midterm elections showed Democrats winning majorities in both chambers of Congress, with the stock's woes deepening amid the controversy.
In the first two trading sessions after Huang disclosed the affair and Nvidia's board opened its inquiry, the company shed over $427 billion in market capitalization.
The stock has rebounded during Wednesday's trading session, with shares up about 3.5% as of mid-afternoon.
NVIDIA CASE HIGHLIGHTS RISKS OF ALLEGED 'HONEYPOT' SCHEMES TARGETING EXECUTIVES
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | NVIDIA CORP. | 173.73 | +4.84 | +2.87% |
Despite investors questioning Nvidia's outlook, the company remains one of the most favored stocks on Wall Street.
Nvidia carries a median price target of $314, according to LSEG data, which implies about 82% upside from its current levels, with 59 of 64 brokerages rating the shares as a "buy" or "strong buy."
CLICK HERE TO DOWNLOAD THE FOX NEWS APP
Reuters contributed to this report.