AI stock Nvidia resumes losing run as brokerages turn bearish; Jensen Huang exit fears, board probe spook investors

A Ksheerasagar

Global investment firms have turned increasingly bearish on Nvidia, cutting their price targets for the world's most valuable semiconductor company by market capitalisation as governance concerns and leadership uncertainty mount.

Baird issued a rare downgrade of Nvidia, while Morgan Stanley removed the stock from its Top Pick list on Wednesday, while BofA Global Research also removed Nvidia from its US 1 List, while at least three other brokerages, including Wells Fargo and Citigroup, lowered their price targets earlier this week.

Baird downgraded Nvidia's rating to "neutral", citing limited visibility into 2027 ​data-center spending, potential demand softening after years of breakneck AI investment ⁠and uncertainty over Huang's tenure beyond next year.

Morgan Stanley removed Nvidia from its Top ​Pick list while maintaining its "overweight" rating with an unchanged target price of $300, Reuters reported.

Bernstein on Thursday slashed its price target on Nvidia shares by half, from $400 to $200. Stacy Rasgon, a senior analyst at Bernstein, told CNBC's 'Squawk Box Asia' on Thursday that the allegations involving Huang and a direct report could make it "much tougher for the board to leave him in position," according to the report.

Huang's reported relationship with a Chinese businesswoman, who has been alleged to have links to Beijing's intelligence services, has triggered an internal board investigation, an FBI inquiry, and calls in Washington for him to step down.

The developments have raised fresh questions about Nvidia's dependence on its CEO and the company's China-related chip dealings.

Even before the latest controversy, Nvidia shares were facing pressure as investors increasingly questioned the sustainability of the AI trade and the hundreds of billions of dollars in capital expenditure being committed to building AI infrastructure.

Following a brief recovery in the previous trade, Nvidia shares resumed their losing run on Thursday, falling 7% in post-market trading after reports emerged that the company's board was considering Huang's future following allegations of two extramarital relationships — one involving an employee and another involving a businesswoman alleged to have links to Chinese intelligence.

The Wall Street Journal first reported that the board was preparing to force Huang out. The report came minutes after The New York Times reported that Huang had another alleged romantic relationship with Nvidia's vice president of healthcare.

According to a New York Times report, the alleged relationship was with Kimberly Powell, Nvidia's vice president of healthcare.

Huang and Powell were reportedly captured on camera behaving affectionately towards each other at a hotel in San Jose, California, in March, CNBC reported, citing The New York Times.

If the losses hold, Nvidia will have lost around $600 billion in market value since the board announced its investigation into Huang's reported relationship with Alice Huang, a businesswoman accused of working with Chinese intelligence services.

Under Nvidia's bylaws, Huang can be removed "with or without cause" through a majority vote of the board of directors. Nvidia has 11 directors and considers all but Huang independent, according to Reuters.

According to Reuters, Huang's potential departure would leave a significant leadership vacuum at the roughly $4 trillion chipmaker, which he co-founded and built over more than three decades into the world's leading supplier of AI chips.

The company is now positioned at the centre of the global AI boom and the technological rivalry between the United States and China.

The leather-jacket-wearing technology executive's position has also placed him at the centre of the geopolitical rivalry between the US and China, which are locked in a battle for supremacy in artificial intelligence.

Several Wall Street analysts told CNBC that if Huang were removed as CEO, Nvidia shares could fall by 20%, given how critical he has been to the company's success. Nvidia stock has already declined more than 20% over the past month.

Bloomberg reported on Wednesday that Nvidia's board had been working with an outside firm to identify potential successors to Huang, citing a person familiar with the situation.

A Ksheerasagar

Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.

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