Key Takeaways
- By Nov. 12, Bernstein, Evercore ISI, Oppenheimer, William Blair, KeyBanc and Melius had cut NVIDIA to Hold-type ratings. Jensen Huang resigned as CEO that morning.
- The downgrades are about who runs NVIDIA next, not the chips.
- Consensus EPS for the year ending January 2028 has climbed to $15.93 from $12.82 in 90 days.
- At 14.3x forward earnings on Nov. 11, much of the bad news looks priced in. The Nov. 17 report is the next test.
NVIDIA (NVDA) lost six Wall Street backers and its CEO. By Thursday, Nov. 12, Bernstein, Evercore ISI, Oppenheimer, William Blair, KeyBanc and Melius had cut the stock to the equivalent of a Hold, and that morning NVIDIA said Jensen Huang had resigned after 33 years. The stock fell as much as 14% to $148.80 before recovering to around $165, about 5% below Wednesday’s close of $173.73. That close was already 27% below the Oct. 6 closing high of $239.24.
The Trouble Started at the Top
On Tuesday, Nov. 10, NVIDIA’s independent directors hired Wachtell, Lipton, Rosen & Katz to investigate Huang.
On Wednesday, The Wall Street Journal reported that the board was preparing to oust him, and reports named a second relationship, with Kimberly Powell, an executive who reported to Huang. On Thursday, the board said Huang had resigned as CEO and director, effective immediately. CFO Colette Kress is interim CEO while the board searches for a successor.
Baird had already cut the stock to Neutral on Wednesday, with a $200 target, partly over Huang.
Nobody’s Blaming the Chips
Evercore ISI’s Mark Lipacis moved to In Line from Outperform and cut his target to $186 from $465. Bernstein’s Stacy Rasgon went to Market Perform and halved his target to $200 from $400.
Rasgon’s worry is what nobody knows yet: “Our gut tells us that we probably haven’t yet fully probed the depths of what might be found here,” he wrote. He kept his earnings forecasts as they were.
Oppenheimer’s Rick Schafer moved to Perform and dropped his target, calling Huang’s exit a “material, potentially thesis-changing event.”
TIKR Tracks 62 Analysts on NVIDIA. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on NVIDIA, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See NVIDIA’s Analyst Ratings
Does Evercore’s $186 Add Up for NVIDIA Stock?
Evercore’s $186 sits 41% below the $313 mean target on Nov. 12. That mean has come down from a peak of $329 this fall, but it was only $232 a year earlier.
Analysts expect EPS of $9.32 for the year ending January 2027 and $15.93 for the year ending January 2028, a 71% jump.
NVIDIA’s new chair, Harvey Jones, expects operations, customer commitments and the product roadmap “to continue without interruption,” so I expect these estimates to hold. Yet at Wednesday’s close, the stock traded at 14.3x forward earnings, near its five-year low of 13.9x and far below its five-year average of 35.7x.
Evercore’s $186 is just 11.7 times the $15.93 analysts expect for the year ending January 2028. At about $165, the stock trades at about 10.4 times it.
Is the Worry Already in NVIDIA’s Price?
Losing Huang will hurt. Rasgon told CNBC it’s “not intuitively obvious” who could succeed him. The business has its own pressure too: management expects gross margin to bottom at 71% to 72% in the January quarter as memory prices climb.
Still, the selloff looks overdone to me. At these multiples, investors already get a deep discount for the uncertainty, on estimates that have climbed since August.
Kress reports Nov. 17. Revenue against the $108.0 billion guide covers the quarter to Oct. 25, under Huang. The margin outlook is the first read on NVIDIA without him.
So What Is NVIDIA Stock Actually Worth?
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