Jensen Huang After the Affair Scandal, NVIDIA Faces a Rare Downgrade from Wall Street
Businessinsider
16m ago
Ai Focus
Baird downgraded NVIDIA's rating from 'Buy' to 'Neutral' due to the extramarital affair controversy surrounding Jensen Huang, stating that uncertainties regarding U.S. government actions, investigation results, revenue impacts, and the tenure of CEO have not been resolved. Although Morgan Stanley maintains its overweight rating and a target price of $300, it has removed NVIDIA from its list of preferred stocks.
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The extramarital affair involving Jensen Huang has stirred NVIDIA's stock price in recent days, and some analysts on Wall Street have also begun to readjust their views under the influence of this scandal.

Baird Analyst releases report, rarely downgrades NVIDIA's rating, stating that Huang's extramarital affair is one of the reasons they question the company and its stock price prospects.

The institution downgraded NVIDIA's rating from 'Buy' to 'Neutral', and mentioned that there are disputes surrounding the relationship between Huang and Alice Huang. Alice Huang is an executive at a Singapore-based data center company, Megaspeed.

Baird wrote on Tristan Gerra: "We will downgrade our rating to neutral until the possible actions by the U.S. government surrounding the upcoming congressional hearings, the conclusions of U.S. government investigations, the short-term impact on revenue from adjustments to risk channels, the quantification of potential costs, and the elimination of uncertainties related to the CEO's tenure are resolved."

In the view of Baird, the US government may tighten export controls on advanced AI chips due to concerns over the so-called "Southeast Asia data center vulnerabilities." The so-called "Southeast Asia data center vulnerabilities" refer to the possibility that Chinese technology companies may obtain restricted NVIDIA GPU by conducting business with enterprises in places such as Singapore and Malaysia.

Gerra indicates: 'We believe that lower-grade freight is being transported to Asian warehouses, and some of this inventory is awaiting demand from China. We estimate that this could equate to a write-off of $5 billion.'

After the scandal surrounding CEO emerged, more than one institution downgraded their optimistic views on NVIDIA. Morgan Stanley analyst Joseph Moore removed the chip manufacturer from the bank's list of top recommended stocks, but he still maintains a 'buy' rating and a bullish target price of $300.

Moore indicates that since NVIDIA was included in that list on October 2nd, its stock price has fallen by 25%, but his team still believes that the AI construction cycle is strong and sustainable.

"We acknowledge that short-term uncertainties will continue, as we believe that the leadership of CEO Jensen Huang is crucial to the company's strategic direction," he said.

Even one of Wall Street's most staunch bulls acknowledges that if the Huang controversy continues to worsen, it could have a negative impact on NVIDIA's stock price. On Tuesday, this heavy bull in the technology and AI sectors, Dan Ives, stated that if Huang leaves NVIDIA, the company's value could decrease by 30%.

“Jensen is the core of NVIDIA. The company's AI success and ambition are closely linked to his continued tenure in CEO. He is irreplaceable,” said Ives. “There is no one else in the management reserve who could seamlessly take over from CEO.”

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