Chip giant Nvidia (NVDA) is going through a turbulent time, with CEO Jensen Huang resigning after reports of two extramarital affairs, one of which was with an alleged Chinese spy. This leaves the company searching for a new CEO who can replicate the success Huang built over his 33-year tenure at Nvidia’s helm.
Analysts are not excited about Hunag's departure, as it creates uncertainty about the company’s future. Baird analyst Tristan Gerra lowered his rating for NVDA stock from “Outperform” to “Neutral” and cut his price target from $500 to $200, as more clarity is needed regarding potential U.S. government action.
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Baird expects a number of potential outcomes as a result of the scandal, including a possible new ban on H200 exports to China, tighter export controls, and U.S. action against Megaspeed. Let's take a closer look.
About Nvidia Stock
Nvidia has become one of the world’s most valuable companies, driven by its leadership in artificial intelligence (AI) and high-performance computing (HPC). Its advanced GPUs and AI platforms power data centers, cloud services, and next-generation applications, making Nvidia central to the global AI expansion.
With a market capitalization of $4.18 trillion, Nvidia supplies chips to major technology firms including Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META). Nvidia has also partnered with leading financial institutions to create financing platforms aimed at mobilizing more than $500 billion for AI infrastructure, accelerating AI growth and reinforcing its industry-wide role.
NVDA stock has fallen as investors have worried that heavy AI data-center spending may not deliver enough profit. Rising costs, competition, China restrictions, regulatory concerns, and uncertainty around now former CEO Jensen Huang have also hurt confidence. Over the past 52 weeks, NVDA stock has dropped 14%, while it is down 25% over the past six months. Over the past five days, NVDA stock has also dropped 8%. Shares reached a 52-week high of $243.37 on Oct. 6, but they are now down 32% from that level.
www.barchart.com Meanwhile, Nvidia's forward price-to-earnings (P/E) ratio of 18.1 times is lower than the industry average of about 20.3 times.
Nvidia Q2 Earnings Beat as AI Demand Drives Record Revenue
Nvidia posted blockbuster second-quarter results for fiscal 2027. Revenue increased 106% year-over-year (YOY) to $96.2 billion, above the $91.8 billion Wall Street analysts expected. Data-center revenue drove the growth, climbing 117% YOY to $89 billion. The top-line tailwinds also translated into bottom-line gains, as non-GAAP operating income rose 124% YOY to $63.9 billion, while non-GAAP EPS climbed 120% YOY to $2.22, beating analysts' estimate of $2.09.
For Q3 fiscal 2027, which is scheduled to be reported on Nov. 17 after the market closes, Nvidia expects revenue of $108 billion, plus or minus 2%, with a gross margin of 74%, plus or minus 50 basis points. Wall Street analysts are robustly optimistic about Nvidia’s future earnings. Analysts expect EPS to climb by 101% YOY to $2.49 in Q3. For fiscal 2027, EPS is projected to surge 103% YOY to $9.29, followed by 69% growth to $15.74 in fiscal 2028.
What Do Analysts Think About Nvidia Stock?
Baird is not alone in its pessimistic view on NVDA stock. Analysts at Bernstein recently downgraded the stock from “Outperform” to “Market Perform” and cut the price target from $400 to $200 amid the recent turmoil. Bernstein wrote that it had “had enough.”
KeyBanc analysts also downgraded NVDA from “Overweight” to “Sector Weight.” KeyBanc noted that Huang’s exit could raise strategic and execution risks, justifying a lower valuation. While the firm expects strong fundamentals, finding a leader with Huang’s vision and influence may be difficult.
Meanwhile, Cantor Fitzgerald analysts maintained an “Overweight” rating on Nvidia but cut the price target from $350 to $250. Analysts see the CEO stepping down as a huge setback.
However, Wall Street still has an overall positive view of Nvidia stock with a consensus “Strong Buy” rating. Of the 52 analysts rating the stock, 47 have a “Strong Buy,” three have a “Moderate Buy,” one analyst has a “Hold” rating, and one analyst has a “Strong Sell” rating. The average price target of $324.45 represents potential upside of 95% from current levels, while the Street-high price target of $515 indicates a possible 210% climb from here.
www.barchart.com On the date of publication, Anushka Dutta did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.