Nvidia (NASDAQ: NVDA) stock has seen a wave of analyst downgrades and price target cuts this week as uncertainty around CEO Jensen Huang’s affairs and future at the company weighed on market sentiment.
On November 12, William Blair downgraded Nvidia from “Outperform” to “Market Perform,” warning that the possibility of Huang’s departure and increased scrutiny of the company could become a significant headwind in the near term.
Similarly, the firm said that potential leadership changes could complicate Nvidia’s execution and undermine investor confidence. That is, intensifying competition in artificial intelligence (AI) infrastructure could further increase the company’s execution risks.
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Nvidia shares were trading at $173.73 at press time, down nearly 24% on the monthly-chart.
Jensen Huang’s departure could tank Nvidia stock, Oppenheimer says
The downgrades followed reports that Nvidia’s board is preparing to remove Huang as CEO, which could trigger multiple investigations, including an independent board probe and a requested briefing before the U.S. House of Representatives.
As a result, Oppenheimer also downgraded Nvidia, moving its rating from “Outperform” to “Perform” and removing its price target altogether on November 12. The research note described Huang’s potential departure as having lasting consequences, as his importance for the company’s image cannot be overstated.
Still, Oppenheimer expects some upside to Nvidia’s third-quarter results and fourth-quarter outlook, although it admits that near-term fundamentals are likely to take a hit. It also mentioned that the likes of AMD (NASDAQ: AMD) and Broadcom Inc. (NASDAQ: AVGO) could potentially benefit from more dramatic board changes.
Huang’s departure could be a base-case scenario
Meanwhile, Stifel lowered its Nvidia price target to $205 from $315 while maintaining a “Buy” rating. The firm said it now considers Huang’s departure as a base-case scenario, but expects Nvidia to deliver a modest earnings beat on November 17.
The revised $205 price target is based on 13 times the fiscal 2028 earnings-per-share (EPS) estimate of $15.65, compared with a previous valuation multiple of 20 times. According to Stifel, the primary concern is no longer Nvidia’s underlying business performance but rather the valuation the market is willing to assign amid leadership uncertainty.
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Bernstein SocGen Group also downgraded Nvidia from “Outperform” to “Market Perform” and slashed its price target from $400 to $200. Analyst Stacy Rasgon argued that the viability of Huang remaining in his position represents the biggest risk.
Despite the downgrade, though, Bernstein stressed that Nvidia’s underlying fundamentals remain intact, with revenue growth and demand for its AI products continuing to support the long-term business outlook.
Nvidia stock price target cuts mount up ahead of earnings
Earlier this week, Wells Fargo lowered its Nvidia price target from $315 to $300, while Robert W. Baird made a considerably larger reduction, lowering its target from $500 to $200. Citi also slashed its target, moving from $285 to $225.
Thus, with Nvidia’s November 17 earnings report approaching, investors are facing a combination of leadership uncertainty, governance concerns, and questions about the company’s ability to maintain its competitive position with Huang potentially leaving.
Overall, analysts generally continue to recognize Nvidia’s strong AI business fundamentals, but the latest downgrades suggest that management uncertainty has become a significant factor in the stock’s valuation.
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