Wall Street analysts are turning on once-unassailable Nvidia stock as Jensen Huang departs

Wall Street analysts have seen enough.

The bullish tide is turning for Nvidia as banks issue a wave of downgrades on the stock amid the scandal roiling the chipmaker.

Nvidia was once unassailable, with few analysts willing to even hold a neutral rating. That changed rapidly this week, beginning with a few tentatively downbeat views on the company in light of Huang’s affairs, which gave way to a deluge of downgrades on Thursday shortly before Jensen Huang stepped down as CEO. CFO Colette Kress will take over as interim CEO.

The situation has been a nightmare for investors, who had been fretting about Huang’s tenure at the chipmaker amid revelations about an affair with a suspected Chinese spy and another relationship with Nvidia insider Kimberly Powell, the company’s vice president of health care.

Huang has been the face of the AI since the boom kicked off at the end of 2022, steering the company through an enormous growth cycle that’s sent the stock soaring.

Analysts hit the stock with a series of downgrades as the sell-off accelerated. Nvidia, once the world’s most valuable company by market cap, plunged another 11%. The stock is down 27% from its peak in early October.

Here’s what analysts are saying about Huang’s departure:

Bernstein: “Where did he find the time?”

In a note leading up to Huang’s exit, Bernstein slashed its rating on Nvidia from “Outperform” to “Market-Perform” and lowered its price target from $400 to $200.

In a separate note earlier this week, analysts pointed to the recent New York Times report that unveiled Huang’s second publicly known affair with Kimberly Powell, Nvidia’s vice president of healthcare.

“Where did he find the time? a team led by Stacy Rasgon, a senior analyst at the firm, wrote. “We’ve had enough, and prefer to watch from the sidelines.”

Dan Ives: “Dark moment” for Nvidia

Tech bull Dan Ives slashed his price target on Nvidia from $300 to $225 a share. Previously, he said that if Huang were to depart Nvidia, the stock could fall as much as 30%.

Ives, who has relentlessly aired his bullish view of Nvidia over the years, called Huang’s departure a “dark moment” for the company and the US tech industry at large. Other tech leaders will need to “step in up even more” now that Huang, who’s been likened as an AI visionary, is gone, he wrote in a note Thursday morning.

He also floated the possibility that Tim Cook, Apple’s former CEO, could be a “dark horse” candidate for Nvidia’s new leader.

“What seemed impossible a week ago is now a reality,” the Yorkville Ives senior managing director wrote. “The old Jensen, the black leather jacket, the Godfather of AI, the rock star viewed as the face of the AI boom, is over and in the past; his value to the company pre and post this week is dramatically different, and the board did what we said it needed to do.”

Ives said that Nvidia still remained the “clear leader” in AI chips, adding in a previous note that his firm wasn’t downgrading shares.

Oppenheimer: Nvidia at risk of “brain drain”

Analysts at Oppenheimer downgraded Nvidia from “Outperform” to “Perform,” and removed their price target for the stock. Analysts called Huang’s departure a “potentially thesis-changing event’ for investors.

The firm also flagged the risk that Nvidia could soon see “brain drain,” with its most talented workers leaving on news that Huang is out.

“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,” the firm wrote, adding that it believed Huang was “deeply involved” in all of Nvidia’s strategic decisions.

“We see massive shoes to fill and no obvious successor,” they added.

William Blair: Nvidia at risk of losing competitive advantage

Ahead of Huang’s resignation, William Blair analysts said his likely exit and “heightened scrutiny” of Nvidia would likely be a “significant overhang” on the stock over the near term.

The firm downgraded its rating from “Outperform” to “Market Perform.”

“Our concern, though, is that without Huang, Nvidia loses the creative, relationship-driven dealmaking that has underpinned its market leadership over the last two years,” the analyst said. “While existing contracts will survive a CEO change, what’s at risk is the next round of deals, and with it Nvidia’s ability to defend its share into 2027 and beyond.”

Huang’s departure opens up Nvidia to more competition from companies like Broadcom and AMD, analysts added.

Beyond Huang’s scandal, the firm said it was also concerned that Nvidia’s competitive moat around AI infrastructure was narrowing, pointing to growing success around GPU alternatives.

KeyBanc: New long-term risks

KeyBanc downgraded Nvidia from “Overweight” to “Sector Weight,” citing the “long-term execution” and strategic risks if Huang were to leave the chipmaker.

Huang has played a critical role in operating the firm and setting up its long-term strategy so far, analysts said. In 2024, Huang said he had 55 direct reports, a detail that’s sparked fear that the former Nvidia CEO won’t be easily replaced.

“We believe Huang’s departure represents a material increase in strategic, organizational, and execution risk that warrants a higher risk premium and lower valuation multiple for the stock. While we expect core fundamentals to remain strong for the foreseeable future, we believe it will be challenging for NVDA to find a successor with the same leadership and strategic vision as Huang,” analysts wrote on Thursday.

The bank removed its price target for Nvidia, but said it saw a fair value of $170, implying another 2% downside from current levels.

Citi: Huang’s exit marks “the end of an era”

Citi slashed its price target on Nvidia to $225 a share ahead of Huang’s departure on Thursday.

The bank said it would maintain its “Buy” rating on the stock. “If Jensen were forced out, it would mark the end of an era,” analysts wrote in a note.

“A leadership transition creates an overhang on the stock given his central role in strategy, product vision, customer relationships, and investor confidence.”