Key Takeaways
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NVIDIA stock is down 29% from its October closing high. Reports tied CEO Jensen Huang to a suspected Chinese spy, and the company’s board has opened an investigation.
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Bernstein kept its Outperform rating and $400 price target, 137% above the Nov. 10 close, and its analyst says the call depends on Huang staying.
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The analysts’ consensus target is $327, and their earnings estimates for the year ending January 2028 keep rising.
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Bernstein’s target implies 33x forward earnings, below NVIDIA’s five-year average of 36x, so the call holds up on the numbers, and a change at the top is the bigger risk.
NVIDIA (NVDA:NASDAQ) closed at $168.80 on Nov. 10, down 29% from its Oct. 6 closing high, as questions about CEO Jensen Huang pile up. Bernstein’s Stacy Rasgon still sees 137% upside to his $400 price target, as long as Huang keeps his job.
Two weeks of bad headlines
The New York Times first reported on Oct. 29 that U.S. intelligence had concluded Alice Huang, a former executive at NVIDIA customer Megaspeed, passed information to Beijing. An NVIDIA spokesperson told the Times at the time that Huang’s interactions with Alice Huang were “not unusual or unexpected,” and China’s embassy denied the allegations. Then the midterms added a second worry, with former White House AI czar David Sacks saying he’s “really worried about 2028” for data center spending.
On Nov. 8, NVIDIA’s board opened an independent investigation into reports that Huang was the target of a foreign intelligence effort, and Huang apologized to employees for being unfaithful to his wife. The board said it still has confidence in him. Then came a shareholder class action on Nov. 9, a report from The Information on Nov. 10 that the relationship helped move $7.5 billion of NVIDIA chips to Chinese firms, and word from House Foreign Affairs chair Brian Mast that he’d “absolutely” consider a subpoena if Huang doesn’t respond to lawmakers by Nov. 11.
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Bernstein is betting on Huang staying
Rasgon kept his Outperform rating and $400 target in a note after the board’s announcement. He doesn’t expect the scandal to hurt demand for NVIDIA’s chips, but said the headlines would be a “heavy distraction” at the very best. Bernstein also flagged key-man risk, since Huang has about 60 direct reports and it isn’t clear who would step in.
