NVIDIA Corporation (NVDA.US) fundamentals remain intact, but more problems may emerge! Bernstein joins the downgrade wave, cutting its target price by half to US$200.

Investment bank Bernstein, in its latest research report, downgraded its stock rating on NVIDIA Corporation (NVDA.US) from "Outperform" to "Market Perform," and cut its target price by half, directly from US$400 to US$200. Bernstein noted that NVIDIA Corporation Chief Executive Officer (CEO) Jensen Huang sent an internal letter to all employees on November 8, admitting to infidelity toward his wife and apologizing to his family, employees, the board of directors, partners, and shareholders. NVIDIA Corporation's board of directors announced the same day that it had established a special committee composed of independent directors and, with the assistance of outside independent legal counsel, launched an independent investigation to determine whether Jensen Huang had become a target of actions by a foreign intelligence agency. Just three days later, Jensen Huang was reported to be involved in a second extramarital relationship, with the woman being an NVIDIA Corporation vice president who reported directly to him. Meanwhile, according to media reports citing people familiar with the matter, NVIDIA Corporation's board of directors is busily preparing to remove Jensen Huang, with a board meeting as early as November 12 to decide his fate, and has already cooperated with external headhunting firms to identify a successor, considering first appointing an interim CEO as a transition. After the initial extramarital affair report emerged, Bernstein had noted that whether Jensen Huang could continue to serve as NVIDIA Corporation's leader was the biggest risk that these allegations brought to NVIDIA Corporation's stock. The institution believed at the time that, whether for shareholders, the board of directors, or the U.S. government, having him leave would not serve the best interests of any party. But as the latest news surfaced, the institution believes it now seems impossible for NVIDIA Corporation's board of directors to continue to keep him in this position. And if it turns out that NVIDIA Corporation's board of directors does not remove him at this time, this would clearly bring further risk, because based on the current situation, it seems very likely that more allegations will be exposed. Bernstein said that on the positive side, despite the leadership problems, NVIDIA Corporation's business fundamentals clearly remain solid, and its operating figures remain extremely large (and may continue to grow). The institution believes that NVIDIA Corporation is unlikely to encounter major problems in business operations while searching for new leadership. Of course, NVIDIA Corporation's stock price is now almost absurdly cheap (and is still getting cheaper at this moment), and clearly the market is pricing a large amount of negative news into the stock. But on the other hand, Bernstein said it is difficult to recommend that investors buy aggressively at current levels, because there is no doubt that more problems will emerge. These problems may come from inside the company, and may also involve business-related media headlines and new government investigations. In addition, the new variable of who will take over the company, as well as other problems that the successor may or may not discover, will further increase uncertainty. The institution said it could not even begin to guess whom NVIDIA Corporation could find to succeed Jensen Huang. As for the supply chain itself, Bernstein is also considering what will happen to NVIDIA Corporation's many investments, various support arrangements, and remaining guarantees in this area. On the other hand, some of NVIDIA Corporation's competitors have performed strongly recently due to related news and are expected to continue to receive market support in the future. Bernstein acknowledged that in making this rating adjustment, the institution went through considerable internal debate and can understand the logic of buying on dips. But intuition suggests that it may not yet be fully clear how serious the problems that could be exposed behind this turmoil may be, so it prefers to stay on the sidelines for now. The institution therefore downgraded NVIDIA Corporation's stock rating to "Market Perform" and cut its target price from US$400 to US$200 (corresponding to about 11 times forward price-to-earnings, down from 21 times previously; this valuation multiple is applied to the average of the institution's fiscal 2028 and fiscal 2029 earnings per share forecasts of US$19.04, with earnings forecasts unchanged). The institution added that although the opportunity in the data center market is extremely large, the leadership difficulties and the shadow of an investigation that may last for some time may continue to weigh on NVIDIA Corporation's stock price. Bernstein's view is similar to that of Dan Ives, a partner at Yorkville Ives and a well-known tech stock analyst. Dan Ives said that if NVIDIA Corporation did not have Jensen Huang, the stock's fair value would fall by about 25% to US$225, while if Jensen Huang continues to lead the company, the stock's fair value is expected to fall to US$300. Analysts including Dan Ives wrote in a report: "The reality is that, in the eyes of the public, customers, and the tech community, the Jensen Huang of the past no longer exists. As more news continues to emerge, the board is also quickly realizing that the situation is getting more serious by the day." Dan Ives was even more direct in a social media post about NVIDIA Corporation's potential leadership change: "In our view, Jensen Huang's days at NVIDIA Corporation may be numbered, and this sign is already very clear. We expect that within the next 48 hours, there will be a great deal of change in the situation. Jensen Huang has created a reputational stain for himself and NVIDIA Corporation, and now has also created a complicated web of relationships. Without Jensen Huang, NVIDIA Corporation is worth US$225." The analysts added that the key issues to watch now include: who might succeed Jensen Huang? What will the interim strategic roadmap look like? Will there be any changes to the board? How will NVIDIA Corporation respond to government investigations? And how will NVIDIA Corporation's GPU chips enter the Chinese market? However, they still said: "NVIDIA Corporation itself and its leading GPU technology will continue to develop, and this will not change the company's already established strong position in the chip race of the AI revolution." In addition to Bernstein, investment bank Baird also downgraded its stock rating on NVIDIA Corporation from "Outperform" to "Neutral," and cut its target price by 60% from US$500 to US$200. The institution said it will adopt a more cautious stance until government investigations, possible measures after congressional briefings, and potential financial impacts become clear. More major Wall Street banks have also cut their target prices for NVIDIA Corporation. Citi, in its latest research report released on November 12, cut its target price for NVIDIA Corporation from US$285 to US$225, a reduction of 21%, while still maintaining a "Buy" rating. Citi said bluntly that if Jensen Huang is forced to leave, it would mark the end of an era. During his tenure, NVIDIA Corporation became the dominant force in AI infrastructure, the most direct beneficiary of the global AI spending cycle, and one of the highest-market-cap companies in the world. This influence is not conferred by the position, but is rooted in strategic judgment, product vision, customer relationships, and investor confidence. For this reason, Citi believes a leadership transition would put sustained pressure on the stock price. In Citi's framework, the key is not only "whether there will be a change of person," but also "how long the uncertainty will last." From board deliberations and the search for external candidates to the formal handover, every step lengthens the period of pressure. For a company that locks in customers through multi-year roadmaps, the period of ambiguity itself is a cost. The more realistic impact is on the customer side. Purchasing decisions by hyperscale cloud providers are usually tied to multi-year computing roadmaps, and personnel changes may cause some orders to revert from "commitment" to "observation." Such delays will not immediately show up in financial reports, but often show up first in valuation multiples. In addition, Wells Fargo & Company cut its target price for NVIDIA Corporation from US$315 to US$300. Mizuho Securities cut its target price for NVIDIA Corporation from US$315 to US$250, but still believes that NVIDIA Corporation's current stock price is "absurdly cheap" and a good buying opportunity. Morgan Stanley and Bank of America Corp both removed NVIDIA Corporation from their top picks lists but still maintained "Buy" ratings. At least for now, Wall Street banks' stance on NVIDIA Corporation is not so bad as to shout "Sell." LSEG data shows that of 64 brokerages, 59 still give "Buy" or "Strong Buy" ratings, with a median target price of US$314.