The latest scandal involving CEO Jensen Huang and the extended-session stock price drop has led many to wonder if Nvidia (NASDAQ: NVDA) shares remain a ‘Buy’, and Wall Street’s initial reply appears to be a fairly confident ‘yes.’
Specifically, out of the five analysts to comment on the weekend developments already on the morning of Monday, November 9, four confirmed their previous ‘Buy’ ratings for the semiconductor giant’s equity.
To begin with, RBC Capital’s Srini Pajjuri confirmed his previous positive recommendation, while estimating that NVDA stock can rally to $330. Bank of America (NYSE: BAC) analysts Vivek Arya and Stacy Rasgon from Bernstein were even more positive, with the former setting the 12-month Nvidia price target at $350 and the latter at $400.
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James Schneider of Goldman Sachs (NYSE: GS), meanwhile, was more measured with a $300 forecast, though he primarily focused on last week’s sell-off and how it, in his opinion, turned the equity’s risk/reward attractive.
Nvidia stock faces first rating downgrade in months
Elsewhere, Aletheia Capital analyst Stefan Chang came out as the outlier among the initial reactions. The Wall Street expert downgraded the Nvidia stock rating from ‘Buy’ to ‘Hold’, though no price target for the next 12 months was assigned in the note.
According to the analyst, the blue-chip chipmaker’s financial commitments – which have surged more than tenfold to $165 billion – represent a major concern, as do the growing risks from the artificial intelligence (AI) Computing Partner program.
Chang also reflected on the latest scandal involving Jensen Huang and the Chinese honeytrap allegations as adverse developments, with ‘potential internal turmoil’ also being a reason for the downgrade.
The 2027 bear case for Nvidia stock
Lastly, despite Wall Street generally remaining bullish toward Nvidia, it might be underselling the potential risks the company is facing.
Even barring the latest developments, allegations that Microsoft (NASDAQ: MSFT) bought more hardware than it has room for in data centers dating back to May, and the October report that Amazon (NASDAQ: AMZN) lacks the power to run all of its GPUs, call into question the semiconductor giant’s ability to keep growing its revenue into 2027.
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The perceived and arguably real instability of the AI ‘boom’ was already dramatically manifested on Thursday when the U.S. stock market wiped more than $3 trillion in a single session on fears that the ‘Democratic sweep’ in the midterm elections could bring about a slowdown.
Finally, the latest news regarding CEO Jensen Huang could have a major impact on Nvidia in particular, but also on big tech as a whole, given the ‘Chinese spy’ allegations and the previous estimates by some short sellers that the firm was, via a network of intermediaries, doing business in the People’s Republic despite the restrictions imposed by the U.S.
Featured image via Shutterstock
