That Wall Street analysts are downgrading once-untouchable shares of Nvidia (NVDA) in the wake of CEO Jensen Huang’s high-profile affair.
Baird analyst Tristan Gerra lowered his rating on Nvidia to neutral on Wednesday in a note titled “Rise and fall of Icarus; the company will be fine.”
“Downgrade to Neutral until uncertainties regarding U.S. government action likely resulting from the upcoming congressional hearing are resolved, U.S. government investigations reach their conclusions, the revenue impact of short-term risk channel adjustments as well as potential charges are quantified, and uncertainties around the CEO’s tenure are clear,” Gerra wrote.
Huang admitted the affair Sunday in an email to employees. Shares have fallen about 12% since the situation became public.
Nvidia’s board of directors launched a independent investigation in reports that the woman Huang had an affair with was allegedly a spy for the Chinese government.
168.89 -9.78 (-5.47%)
Closing: November 10 at 4:00:01 p.m. EST
174.67 +5.87 (+3.48%)
The board said it hired the powerful law firm Wachtell, Lipton, Rosen & Katz to conduct the investigation. Former Acting U.S. Attorney for the Southern District of New York Joon Kim will lead the investigation.
Gerra highlighted several near-term risks to Nvidia’s stock, including a new ban on H200 exports to China.
“We believe low-level shipments are occurring to Asia-based warehouses, with some inventory awaiting Chinese demand. We estimate this could result in a $5 billion writedown,” Gerra said, adding: “The export control limitations notably address Southeast Asian data center vulnerabilities, as well as potential DOJ actions against Megaspeed and resulting preemptive or forced actions by other data center operators. data centers located in the region with potential exposure to Chinese demand Historically, China-related GPU demand has been higher than Street expectations and often unquantified.
Follow Brian Sozzi on X @BrianSozzi, InstagramAnd LinkedIn. Any advice on stories? Email him at brian.sozzi@yahoofinance.com.
Gn bussni
