Baird gave Nvidia a rare downgrade on Wednesday, as chief executive Jensen Huang's alleged affair with a Chinese spy casts doubt over his tenure.
In a note, Baird analyst Tristan Gerra more than halved the chip maker's target from $500 to $200. Mr Gerra delayed his forecasts for data centres in 2027, saying supply issues are “mostly behind a potential slowdown, alongside potential demand softening”. AI hyperscaler capital expense could also slow to 40 per cent growth or slightly less for 2027, he said.
Baird downgraded Nvidia stock to neutral, while a separate analysis from Morgan Stanley removed it as a top pick.
Nvidia was trying to rally after a difficult period for tech-related stocks.
Shares in the chip bellwether rebounded on Wednesday as CoreWeave's better-than-expected quarterly results lifted other chip stocks. Nvidia shares opened 2.48 per cent higher on Wednesday at $172.68 a shares, after closing 5 per cent higher in the previous session.
However, shares in Nvidia are on track for a sixth consecutive losing week. The company's stock is down about 8 per cent for the year.
Mr Huang admitted to an extramarital affair in a letter to employees on Sunday.
“To my colleagues at Nvidia, including those I have worked alongside for decades, and to our board, partners and shareholders around the world: you deserve better from me. Leading Nvidia is the privilege of my life. My responsibility is to serve you and be worthy of your trust. I have fallen short of that responsibility. I am fully committed to Nvidia and will work to earn back your confidence,” he wrote.
Nvidia's board of directors has launched an investigation into the affair, adding that Mr Huang fully supports the review and is committed to co-operating with it.
“While the board has no reason to believe that either national security or Nvidia secrets were compromised, the board's inquiry will examine all available information … The board has confidence in Jensen and his leadership team and will provide further updates as appropriate,” it said.
The explosive allegations come at a time when traders were already scrutinising AI tech stocks after recent earnings reports stoked fears over data centres and the financing behind them.
Mr Huang's affair has also rocked Washington, with some legislators calling for investigations. The House foreign affairs committee has requested US President Donald Trump to appear for a closed-door briefing with Mr Huang on his interactions with the alleged spy.
US Representatives Brian Mast, John Moolenaar and House permanent select committee on intelligence chairman Rick Crawford requested in a letter to Mr Huang that he brief their committees by November 18.
“The issue of PRC infiltration and access to cutting-edge US technology is core to the investigative work of our three committees this Congress. It is vital that Congress determines the extent to which US national security has been placed at risk,” they wrote, referring to the “People's Republic of China”.
Analysts are also considering Mr Huang's future as they assess the direction of Nvidia, one of the key nodes in the broader AI nexus.
Morgan Stanley analyst Joseph Moore wrote that Mr Huang's leadership is “crucial to the company's direction”.
On Tuesday, tech analyst Dan Ives said he estimates there is a 15 per cent chance Mr Huang is removed as chief executive.
“We believe if Jensen was removed as CEO, Nvidia is worth a lot less (25 per cent to 30 per cent) as a company/stock and would change the future direction of the company and create a dramatically different competitive environment around AI GPUs globally especially for China,” Mr Ives wrote.
The next test for Nvidia will be on November 16, when it is due to report its third-quarter results.
