HSBC Downgrades Nvidia to Hold, Cuts Target to $170 Over CEO Succession

The new target is about 4% above that close. Volume was heavy: 360.7 million shares traded, against a three-month average of 144.3 million.

HSBC analyst Frank Lee gave two reasons. The first is leadership. Huang resigned on November 12, and chief financial officer Colette Kress is serving as interim chief executive with no permanent succession plan announced. Lee expects the stock to struggle until Nvidia names a permanent successor. HSBC said there could be room for a re-rating once a permanent plan is in place and new leadership shows it can deliver the product roadmap, according to Investing.com.

The second reason is trade. About 11% of Nvidia's revenue over the past six quarters came from outside the US and Taiwan, and Lee thinks those sales could face stricter export rules. Export enforcement is already under pressure in Washington over the case of Megaspeed, the Singapore-based chip buyer at the centre of the scandal that preceded Huang's exit.

Reports disagree on the old target. The Motley Fool put it at $375. Some other coverage gave $365.

The stock has fallen 22% since October 29. The Nasdaq is down 4% over the same period, Investing.com reported. Nvidia now trades at 11 times one-year forward earnings, the lowest multiple in 15 years.

HSBC is not the only broker to cut its view this week. Barclays lowered its target to $210 from $275, citing "structural key man risk". DA Davidson cut its target to $200 from $300, pointing to the unplanned nature of Huang's departure. Bernstein kept a market perform rating and a $200 target. Wells Fargo stayed at overweight with a $300 target. Jefferies said the resignation could signal rising US-China tensions over AI chip exports, Investing.com reported.

Other chip stocks fell further than Nvidia on Friday. AMD dropped 8.75% to $534.06 and Broadcom lost 4.76% to $347.01, according to The Motley Fool. The S&P 500 slipped 0.41% to about 7,561. The Nasdaq Composite fell 0.90% to about 25,139.

Nvidia reports fiscal third-quarter results on November 17, its first earnings release without Huang as chief executive. Investors are likely to focus on the conference call for signs of the company's direction and the timing of a permanent appointment.