Baird Downgrades Nvidia and Cuts Its Price Target to $200 Over Huang Uncertainty

Analyst Tristan Gerra titled the note "Icarus' Rise and Fall; Company Will be Fine." He said the neutral rating would stay until there is more clarity on US government action and until "uncertainties around CEO tenure clear," according to excerpts published by Yahoo Finance. Even after the cut, the new target implies an 18% gain from Tuesday's close, CNBC calculated.

The downgrade breaks with an almost entirely bullish consensus. Only three of the 64 analysts covering Nvidia rate it hold or underperform, according to LSEG data cited by CNBC. It also lands days before the company reports quarterly results next week, with the shares down about 30% from their October high.

The Huang affair is the main source of uncertainty. Huang told employees in an email on Sunday that he had been unfaithful to his wife, after reports that US domestic intelligence officials believe the woman involved is a Chinese spy. China has denied the allegations. Nvidia's board has opened an independent investigation and hired the law firm Wachtell, Lipton, Rosen & Katz, with former acting US Attorney Joon Kim leading it. Gerra also pointed to an upcoming congressional hearing as a risk.

The note goes beyond the chief executive. Gerra said he expects a new ban on exports of Nvidia's H200 chips to China. "We believe low-level shipping is taking place into Asia-based warehouses with some inventories awaiting China demand," he wrote, estimating this "could translate into a $5 billion write-down." He also flagged possible tighter export controls on Southeast Asian data centres used to get around the rules, and possible Justice Department action against Megaspeed. Investing.com identified Megaspeed as the Singapore-based data centre company where the woman linked to Huang is reported to work as an executive.

On demand, Gerra estimated that capital spending on AI by the big cloud providers could grow by about 40% or less in 2027, and said supply constraints were "mostly the reason." He pushed back his 2027 data centre forecasts and trimmed his estimates for 2028 and later. He warned that cash-constrained hyperscalers might not make up for lost Southeast Asian demand within a given quarter, and that "revenue impact could be concentrated in a given quarter."

Morgan Stanley also turned more cautious this week. Analyst Joseph Moore removed Nvidia from the bank's Top Pick list under its stop-loss policy, after the stock fell more than 25% from the October 2 date on which it was named. He kept his overweight rating and pointed to "a strong and durable AI buildout." Moore also wrote: "We do acknowledge that the near-term uncertainty will remain."

The shares rebounded in premarket trading on Wednesday, along with a wider rally in chip stocks, after heavy losses earlier in the week. Gerra said some of the concerns are already reflected in the price, but expects the stock will "at best stay in a trading range until the dust settles." The next test is Nvidia's earnings next week, when investors will listen for comments on China exposure and on the board's inquiry.