‘A dark day for Nvidia’: Here’s what analysts have been saying about Jensen Huang’s departure

Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Global markets reacted to news of Jensen Huang's resignation from his role as CEO of Nvidia. The company's board convened Wednesday evening after reports emerged of Huang engaging in a second extramarital affair, this time with an employee. Before the decision, one analyst said Huang was "toast," while another described the developments as "a dark day for Nvidia." In this article NVDA Follow your favorite stocks CREATE FREE ACCOUNT watch now VIDEO 5:04 05:04 Experts react to Nvidia CEO Jensen Huang’s resignation and succession plan Rapid Recap Nvidia investors are preparing for a future without Jensen Huang after the CEO's resignation was announced on Thursday. Markets were on tenterhooks ahead of the decision amid reports that the chip giant's board had convened to discuss his future with the company. By the time of the announcement, at least six analysts had downgraded the stock between Wednesday night and Thursday morning. The New York Times on Wednesday reported that Huang had engaged in a second extramarital affair with an employee. The CEO was already under scrutiny after Huang admitted to having a romantic relationship with a woman U.S. intelligence believes is a Chinese spy. Nvidia announced on Thursday morning that, following a board meeting, Huang would step down after more than 30 years at the company's helm. CFO Colette Kress has been named interim CEO. Those downgrading the stock included longtime Nvidia bull Ben Reitzes of Melius Research. Nvidia shares were seen down more than 12% shortly after the open on Wall Street, bringing losses for the last month close to 25%. Here's what analysts and investors are saying about the company and the stock. Loading chart... Melius Research: Hold, $185 Reitzes changed his rating for Nvidia to hold from buy. His price target is now $185 — down from $315 — is 6% above the level at which shares last closed. "We thought we had experience, but nothing prepares you for what has happened at Nvidia over the last few weeks - and especially since Saturday. The only situation remotely close to this we can recall was HP in 2010. Waiting to see what that Board would do (and who they would hire) that time didn't work out. It was really cheap, too, at ~9x EPS right after its initial swoon. Nvidia is a much stronger, more important company, but its market moves far faster, and this story touches geopolitical flashpoints. In this unique crisis, we have decided (reluctantly) to step aside on Nvidia (now a Hold) after recommending it since we launched our AI platform coverage universe in July 2023," he said. Evercore: In line, $186 Analyst Mark Lipacis downgraded Nvidia to in line from outperform. He also lowered his price target on shares to $186 from $465, implying 7% upside from Wednesday's close. "The Wall Street Journal reported Nvidia's Board was 'preparing to oust' its CEO after he had two extramarital affairs, including one with a suspected Chinese spy. The NY Times reported that Nvidia's Board hired law firm Wachtell Lipton to lead an investigation into the matter. While Nvidia's Board said that it 'has no reason to believe that either national security or Nvidia secrets were compromised,' we believe that the investigation will take time and we expect NVDA's P/E multiple will continue to compress consistent with our 'Late-Innings of the Semi Cycle' thesis, especially since Nvidia has no obvious succession plan or number 2 operational executive," he said. William Blair: Market perform William Blair's Sebastien Naji downgraded Nvidia to market perform from outperform. "After a head-spinning week of news and allegations around CEO Jensen Huang, Nvidia's board is reportedly preparing to remove him, according to the Wall Street Journal. The full story will take time to emerge and may require several investigations, including the board's own independent probe and a requested U.S. House briefing. What is already clear is that Huang's likely departure and heightened scrutiny of the company will be a significant overhang on NVDA shares in the near term. Meanwhile, the potential for a slower AI buildout and more intense competition from other chipmakers will only add to execution risk...governance and regulatory pressure, the potential for more serious fallout, and a sudden change in management are likely to muddle both execution and sentiment. As a result, we are downgrading NVDA to Market Perform and will wait for the dust to settle before reassessing," he said. Oppenheimer: Perform Analyst Rick Schafer downgraded the AI stock to perform from outperform. "We are downgrading shares of NVDA and removing our price target following reports (WSJ, NYT) of founding CEO Jensen Huang's imminent departure amidst allegations of a 2nd extramarital affair. Credible media reports circulated Wednesday evening that NVDA's board is preparing to part ways with Huang following a widely reported relationship with an alleged Chinese spy compounded by new allegations of a relationship with an NVDA executive. This 'one-two' punch appears to have forced the board's hand...While we see upside to the F3Q (Oct.) print and F4Q (Jan.) outlook, we expect fundamentals to take a backseat near term. The departure of Mr. Huang could, in our view, translate to a lingering share overhang," he said. Bernstein: Market perform, $200 Analyst Stacy Rasgon slashed his price target from $400 and downgraded the stock from market outperform. "So now what? On the positive, the fundamentals of the business (if not the leadership) are clearly still intact with numbers that remain massive (and probably still headed higher). We don't think the company should have huge issues operating while engaged in a search for new leadership. And (of course) the shares are almost absurdly cheap (and getting cheaper as we speak); clearly there is a lot of bad news getting priced in here," he said. "On the other hand, we find it hard to advocate stepping in here in size as there will no doubt be more allegations to come (there is a trope that says if you find two ants in your kitchen the best estimate of the total number of ants in your kitchen is not two...), both from internal issues as well as headlines related to the business, new governmental investigations etc. Adding on the new variable of who will take the reins (internal? external?) and anything else they may or may not uncover creates additional uncertainty (and we can't even begin to speculate as to who they might find to fill Jensen's shoes)," he added. KeyBanc: Sector weight Analyst John Vinh downgraded the stock from overweight. "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," he said. Yorkville Ives & Co.: Outperform "In our view the writing is on the wall that Jensen's days at Nvidia could be numbered and we would expect this to be a very fluid situation over the next 48 hours," renowned tech bull Dan Ives said in a note overnight. "Jensen has created a black eye moment for himself and Nvidia and now has created a spider web of complexity that Wall Street, Silicon Valley, DC, and the global tech ecosystem are trying to figure out what is next." "We believe Nvidia's value is $300 per share with Jensen as CEO and $225 per share without Jensen as CEO," Ives added. "The stock will clearly be under pressure with this fluid news but the reality is its a dark day for Nvidia, but the company will navigate this turmoil and get through to the other side and remain a core foundational piece of the