Wall Street is finally moving to distance itself from stricken former AI stock darling Nvidia (NVDA) given the uncertainty surrounding its embattled founder, Jensen Huang.
The company’s board is reportedly meeting to determine if it will oust Huang as chief executive, the Wall Street Journal reported late Wednesday.
According to the New York Times, Huang, whose relationship with a woman alleged to be a Chinese spy has embroiled the company in scandal this week, also had a relationship with Nvidia executive Kimberly Powell, one of Huang’s 60 or so direct reports.
Nvidia stock fell 6.5% in premarket trading following the report.
Oppenheimer just took the eye-opening move (at least from a stock analyst perspective) to completely remove its price target on Nvidia as the Jensen Huang saga ratchets up. This action is usually taken on sub-$10 stocks that are highly volatile after a major negative event. Not one of the world’s largest, most important companies.
Here’s how Wall Street is reacting.
Citi analyst Atif Malik: “If Jensen were forced out, it would mark the end of an era. Under his leadership, Nvidia became the dominant force in AI infrastructure, the primary beneficiary of the global AI spending cycle, and one of the world’s most valuable companies. A leadership transition creates an overhang on the stock given his central role in strategy, product vision, customer relationships, and investor confidence. We believe CFO Colette Kress could serve as interim CEO while the board evaluates external candidates. We lower TP to $225, or 20% discount to prior 19x P/E on increased uncertainty but keep Buy as it is trading ~11x P/E, in line with prior trough.”
Oppenheimer’s Rich Schafer: “We are downgrading shares of NVDA and removing our price target following reports (WSJ, NYT) of founding CEO Jensen Huang’s imminent departure amidst allegations of a 2nd extramarital affair. Credible media reports circulated Wednesday evening that NVDA’s board is preparing to part ways with Huang following a widely reported relationship with an alleged Chinese spy compounded by new allegations of a relationship with an NVDA executive. This “one-two” punch appears to have forced the board’s hand. Huang’s role as the “face of AI” cannot be overstated. His uniquely skillful, forward-thinking, steady and tireless leadership has been critical to NVDA’s success in becoming the undisputed AI leader and world’s largest company. Huang is a hands-on leader with dozens of direct reports. We believe he is deeply involved in all strategic decision making. We see massive shoes to fill and no obvious successor. His departure presents a material, potentially thesis-changing event. NVDA boasts an incredibly deep bench of talent. We see risk that a Huang departure creates a ‘brain drain’ situation at the AI giant, threatening NVDA’s pace of innovation — a critical competitive advantage.”
Stifel’s Ruben Roy: “Nothing has been announced, but we now treat a leadership transition as our base case. The fundamentals are not the issue as we expect a modest F3Q27 beat on 11/17, supply remains the binding constraint, and we continue to believe FY28 estimates skew higher. The issue is the multiple. With no successor publicly identified, we would focus on who leads and on what timeline, retention of senior leadership, and channel and export-compliance posture. We reiterate Buy but lower our target to $205 (from $315), now 13x FY28E EPS of $15.65 (from 20x).”
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