Nvidia stock faces rare downgrades as board investigates CEO Jensen Huang's admitted affair

Résumé détaillé

Baird issued a rare downgrade of Nvidia stock to neutral as CEO Jensen Huang's affair with an alleged Chinese spy clouds the AI giant's outlook.

Bullseye American Ingenuity Fund portfolio manager Adam Johnson explains why Nvidia stock remains a buy despite the boards investigation into CEO Jensen Huang. He argues the companys growth outweighs the executive scandal.

Artificial intelligence giant Nvidia is facing investor scrutiny due to concerns about the company's future amid its internal investigation into CEO Jensen Huang's affair with an alleged Chinese spy.

Huang admitted to being unfaithful to his wife in a statement on Sunday, in which he also said he had fallen short of his responsibilities to the company and said he would cooperate with the investigation.

Nvidia's board of directors initiated an independent probe into the matter, saying that while it has no reason to believe national security or company secrets were compromised, the probe will examine all available information.

The controversy has prompted some firms to alter their assessments of the company's shares, as Baird issued a rare downgrade of Nvidia stock – cutting the AI giant's rating to "neutral" because of a lack of visibility into 2027 data center spending, possible demand softness and uncertainty over Huang's tenure.

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Nvidia CEO Jensen Huang said Sunday that he would cooperate with the inquiry and is committed to Nvidia and U.S. national security. (Sean Rayford/Getty Images)

Morgan Stanley also removed Nvidia from its Top Pick list, although the firm retained its "overweight" rating for the stock, which has experienced a price decline of over 25% since it received the designation last month.

"We do acknowledge that the near-term uncertainty will remain, as CEO Jensen Huang's leadership is crucial to the company's direction in our view," Morgan Stanley analysts said in a note.

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