Baird Downgrades Nvidia and Cuts Target 60% to $200 as Morgan Stanley Drops It From Top Picks Over Huang Scandal

Since Nvidia CEO Jensen Huang admitted in an email to employees last Sunday that he had an extramarital affair, and Alice Huang, a former Megaspeed executive, was identified as the other party, the fallout has moved from Washington to Wall Street.

On Wednesday, Nov. 11, Robert W. Baird downgraded Nvidia from Outperform to Neutral. It cut its price target from $500 to $200, a 60% reduction.

Baird listed three reasons: limited visibility into 2027 data-center spending, the potential for demand to soften after years of heavy AI investment, and uncertainty over whether Huang stays in the job beyond next year.

Morgan Stanley took a softer step. It pulled Nvidia from its Top Pick list but kept an Overweight rating and a $300 target. The bank cited the stock's slide of more than 25% since it added the company to the list on Oct. 2.

The numbers

Nvidia closed at $168.90 on Tuesday, Nov. 10. That left it positioned for its largest weekly decline since March 2025. The company has shed more than $427 billion in market value over recent sessions, a drop that reflects the scandal and broader pressure across the tech sector.

The stock trades at 11.4 times forward earnings. Of the 26 analysts covering it, 25 still rate it Buy or Strong Buy. Several firms are trimming targets or removing Nvidia from favored lists while keeping positive ratings, which is exactly what Morgan Stanley did.

The internal probe

Nvidia's board has brought in Wachtell, Lipton, Rosen & Katz to investigate. The Washington Post reported that the board tapped partner Joon H. Kim to lead it.

Kim spent years in the U.S. Attorney's Office for the Southern District of New York, from 2000 to 2006 and again from 2013 to 2018. In 2021 he was one of the independent investigators who examined sexual harassment allegations against then-New York Gov. Andrew Cuomo.

Huang was back at the Santa Clara headquarters Monday and Tuesday. People familiar with a closed-door meeting told CNBC he opened by apologizing to staff and took no questions before moving on to business. The same people described employee morale as "sad."

His email to employees said: "I know an apology cannot undo what I have done. I hope our family will heal and that, over time, I can earn back your trust."

Washington and the courts

The Justice Department's National Security Division is investigating whether Megaspeed violated export control laws, and that inquiry will also examine Alice Huang, according to a person familiar with the matter. Megaspeed has denied the allegations that it skirted U.S. export law.

Sen. Kevin Cramer, a member of the Senate Banking Committee, is among the Republicans who have called for Huang's resignation. There are bipartisan calls for congressional investigations.

A lawsuit has also been filed alleging investors were misled about the affair and the spy allegations. The complaint's claims are allegations and have not been tested in court.

A Fortune commentary argues the board could face Delaware Chancery Court exposure under the Caremark doctrine, which holds directors liable when they consciously ignore red flags. It points to Boeing's board, whose case settled for $237.5 million. That is the commentary's argument, not a ruling.

The defense

President Trump has backed Huang. "I think he'll be in good shape," Trump said this week, adding that Huang "said he had absolutely no idea that the person in question was a spy." Asked when he first learned of concerns about Alice Huang, Trump said, "They could have been mentioned. Certainly it didn't make much of an impact on me."

Nvidia has pushed back as well. A company spokesperson has said the chip-diversion claims were debunked and described the relationship with Alice Huang as nothing unusual. Nvidia has also said a review found no evidence its chips were diverted.

The record still shows a dated sequence. Weeks after a May 2025 dinner in Taipei, Huang and Nvidia lobbyists met Deputy Secretary of State Christopher Landau to argue for H20 export licenses. A few days later, after Huang met with Trump, the administration approved the sales in exchange for 15% of China revenue going to the Treasury.

Around that time, Nvidia general counsel Tim Teter reportedly contacted Jeffrey Kessler, who heads Commerce's Bureau of Industry and Security. The Justice Department then took control of the Megaspeed probe. Some officials worried the contact had tainted the investigation.

Nvidia reports quarterly earnings in about a week, and investors are expected to focus on data-center demand heading into 2027. The company has not said when the Wachtell review will finish or whether its findings will be made public.