Nvidia, once a trailblazer in the global artificial intelligence (AI) race and the first publicly listed company to surpass a $5 trillion valuation in October 2025, has experienced a dramatic downturn. Over just 26 trading sessions, the chipmaker's market capitalization plummeted by a staggering $1.58 trillion, falling from $5.76 trillion on October 6 to $4.18 trillion by November 12.
The sharp decline has been exacerbated by a series of brokerage downgrades and swirling controversy surrounding CEO Jensen Huang. Bernstein, for instance, cut its target on Nvidia to $200 from $400, stating it had "had enough." Similarly, Baird downgraded the stock to 'Neutral' from 'Outperform,' slashing its target from $500 to $200.
CEO Jensen Huang Faces Scrutiny
Central to Nvidia's recent woes are reports concerning CEO Jensen Huang. A fresh controversy emerged following his admission of a second affair, with a Bloomberg report further suggesting one of these affairs was linked to a woman suspected of being a Chinese spy. This has fueled speculation that Nvidia's board is preparing to oust Huang, with discussions reportedly underway to name a temporary chief and search for a permanent replacement.
"Our gut tells us that we probably haven’t yet fully probed the depths of what might be found here," Bloomberg quoted analyst Stacy Rasgon as writing in a client note. "We’ve had enough, and prefer to watch from the sidelines."
Baird analyst Tristan Gerra highlighted significant uncertainties, including potential U.S. government actions following upcoming congressional hearings, ongoing U.S. investigations, and the revenue impact of potential risk-channel adjustments. These factors, alongside the uncertainty surrounding Huang's tenure, have prompted a more cautious stance from brokerages.
Broader Market Headwinds and AI Outlook
Beyond the internal controversies, Nvidia is also navigating broader market headwinds. Shriram Finance noted a repricing of chip and material providers to data centers, including Nvidia, amid discussions around a moratorium narrative emerging from Texas. This follows a Democratic sweep in the U.S. elections, raising questions over the future of AI buildout.
- **AI Hyperscaler Capex:** Baird warned that AI hyperscaler capital expenditure growth could slow to 40% or less in 2027.
- **Regulatory Outlook:** Markets are interpreting Texas results as a signal for the regulatory outlook for U.S. data-center construction, potentially impacting the multi-year physical buildout after 2028.
- **State-Level Pauses:** While Nomura believes a federal AI data-center moratorium is unlikely, a "temporary pause" at the state level is considered possible, particularly in states like Texas and Georgia where candidates campaigning on such pauses won.
Supply issues and softening demand also contribute to the potential downside for Nvidia. "While H300 lead times remain stretched and demand well exceeds supply, timing risks exist around potential pre-emptive order cuts from risk channels, with exposure estimated at 10-30 per cent," Baird reportedly stated. The combined effect of these factors, including CEO tenure uncertainties, supports a neutral trading range view on the stock in the near term.