Baird and Morgan Stanley downgrade Nvidia amid CEO controversy

Baird downgraded Nvidia to a neutral rating and Morgan Stanley took the stock off its Top Pick list, citing heightened uncertainty surrounding CEO Jensen Huang after reports of an alleged affair with a Chinese businesswoman accused of espionage. The allegations have prompted an internal board investigation, an FBI inquiry and calls from Washington for Huang to step down, raising questions about Nvidia's reliance on its founder and its ties to Chinese chip markets.

Baird said limited visibility into data-center spending through 2027, possible softening of demand after a period of rapid AI investment, and uncertainty over Huang’s tenure beyond next year drove the downgrade. Morgan Stanley kept an overweight rating but noted that “near-term uncertainty will remain, as CEO Jensen Huang’s leadership is crucial to the company’s strategic direction.”

The stock has fallen more than 25% since being named a Top Pick last month, and market value has lost over US$427 billion in two sessions amid a broader tech sell-off following the recent U.S. midterm elections. Nvidia now trades at about 11.4 times forward earnings, compared with 30.4 times for AMD and 16.5 times for Broadcom.

Other brokerages have also trimmed their outlooks: BofA Global Research removed Nvidia from its US 1 List, while Wells Fargo and Citigroup cut price targets earlier in the week. Despite the bearish sentiment, the median price target of US$314 from LSEG data suggests roughly 82% upside, and 59 of 64 brokerages still rate the shares as “buy” or “strong buy.”

Reuters reported that a Chinese university on a U.S. trade blacklist obtained Nvidia’s advanced H200 chips through domestic suppliers, highlighting gaps in export-control enforcement. Republican Senator Kevin Cramer called on Huang to resign, describing the allegations as an “unacceptable national-security risk.”