Nvidia Stock Just Got Downgraded After Jensen Huang's Exit. Should You Sell?
Truist and Craig-Hallum both moved to Hold on Thursday, warning that Nvidia's problems extend beyond the loss of its founder. Not everyone on Wall Street agrees.
Shares of Nvidia (NVDA) experienced a 6% decline on Thursday, dropping to around $164 after co-founder and CEO Jensen Huang announced his immediate resignation. This marked a notable shift from the company's previous valuation, with rival Advanced Micro Devices (AMD) gaining 6%. Analysts reacted swiftly, with two firms downgrading Nvidia's stock rating.
Truist lowered its rating to Hold from Buy and slashed its price target to $174 from $346, emphasizing concerns about potential cultural issues within the company and the risk of Nvidia's GPUs being used in China. Despite the valuation appearing attractive, analysts cautioned that the risks were too significant to confidently forecast revenue or earnings.
Craig-Hallum also moved to Hold from Buy, citing the difficulty in replacing Huang and other ongoing challenges. However, not all analysts agreed to sell; DA Davidson maintained a Buy rating, predicting Nvidia's product lead would endure, though acknowledging potential weakening in its ability to manage the broader AI ecosystem without Huang.
Analysts also pointed to Huang's substantial personal stake in Nvidia, valued at approximately $133 billion. Long-term investors were advised not to panic sell, considering Nvidia's pivotal role in AI development, and emphasized the importance of monitoring the company's quarterly results and CEO search progress for further insights.
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