Nvidia Crashes 12% As Jensen Huang Quits, And Wall Street Slashes Targets To $200
Nvidia shares sank about 12% to around $153 in premarket trading on Thursday after Jensen Huang resigned as CEO, and Wall Street analysts are now slashing their price targets to as low as $200.
Key Takeaways
- Jensen Huang resigned as Nvidia’s president, CEO and board member, effective immediately, after 33 years at the company
- CFO Colette Kress is interim CEO, and Harvey C. Jones becomes the board’s first-ever chair
- Nvidia stock fell from $173.73 to about $153 before the opening bell, already below its 52-week low of $164.27
- Bernstein and Oppenheimer downgraded the stock this week, and Bernstein halved its target to $200
Nvidia’s board announced the change on Thursday and said it will search for a permanent CEO among internal and external candidates. “We expect the company’s operations, customer commitments and product roadmap to continue without interruption,” said new chair Harvey Jones.
Why Huang Is Out
The board opened an investigation into Huang on Sunday over reports of a relationship with an executive U.S. officials suspected of working for Chinese intelligence, and Huang admitted to staff he had been unfaithful to his wife. Reports of a second relationship, with a senior Nvidia employee, followed on Wednesday, and the board met the same day. Nvidia’s release did not give a reason for his exit.
Colette Kress, CFO since 2013, will keep her finance job while running the company. “I am committed to building on the extraordinary foundation Jensen created over the last 33 years,” she said.
Also Read: Nvidia Board Reportedly Moves To Oust Jensen Huang, Here’s Why Its AI Boom Can Survive Him
What Wall Street Is Saying
Oppenheimer’s Rick Schafer called Huang’s departure “material, potentially thesis-changing” and warned of a possible brain drain, naming AMD, Marvell and Broadcom as rivals that could benefit. Bernstein’s Stacy Rasgon still called the stock “very cheap” but said more allegations could surface and the choice of successor adds risk. UBS warned Nvidia might pause its funding of AI companies, which could pull about $50 billion out of the AI ecosystem.
How Far Can Nvidia Fall
None of the analysts who cut their targets this week set one below $200, which is about 30% above where the stock traded before the open. That suggests Wall Street sees the selling as a panic over leadership, not a broken business. Before Thursday the stock already traded at about 14 times next year’s expected earnings, a low multiple for a company whose data center sales more than doubled last quarter.
The risks that could push it lower are new allegations, a long or messy CEO search, staff leaving, tighter U.S. chip export rules and any pullback in Nvidia’s spending on AI customers. The first real test comes on Tuesday, Nov. 17, when Nvidia reports quarterly results and Kress will lead the earnings call. Nvidia has guided to $108 billion in revenue for the quarter.
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