Nvidia Shares Fall Further as Brokerages Cut Targets Amid CEO Investigation

Nvidia stock resumed its decline on Thursday, falling 7 percent in post-market trading after global investment firms turned bearish on the world's most valuable semiconductor company. Baird downgraded Nvidia rating to neutral, while Morgan Stanley and BofA Global Research removed the stock from their top pick and US 1 lists. Wells Fargo, Citigroup, and at least three other brokerages also lowered their price targets earlier in the week. Bernstein slashed its price target in half from $400 to $200. Senior analyst Stacy Rasgon stated that allegations involving CEO Jensen Huang and a direct report could make it much tougher for the board to leave him in position. An internal board investigation, an FBI inquiry, and Washington calls for his departure were triggered by reports of Huang's relationship with a Chinese businesswoman alleged to have links to Beijing intelligence services. Additional reports from The Wall Street Journal and The New York Times revealed that the board was preparing to force Huang out following another alleged romantic relationship with Kimberly Powell, Nvidia vice president of healthcare. CNBC reported that Huang and Powell were seen behaving affectionately at a San Jose hotel in March. Bloomberg reported that the board worked with an outside firm to identify potential successors. If losses hold, Nvidia will lose around $600 billion in market value since the board announced its investigation into Alice Huang. Under bylaws, Huang can be removed with or without cause by a majority vote of the 11-member board, which considers all directors except Huang independent. Reuters noted his departure would create a leadership vacuum at the roughly $4 trillion chipmaker he co-founded.

Context

Nvidia has grown into a dominant force in artificial intelligence infrastructure, making its leadership stability vital for global technology markets. The company sits at the crossroads of intense US-China technological rivalry and massive corporate capital spending on AI chips. Corporate governance investigations at such scale often trigger swift reactions from major financial institutions and equity markets.