NVDA Stock Set For Best Day In Over 2 Months – Baird Downgrades Shares, Flags Slower AI Spending, Jensen Huang Risk

• Baird said it has delayed its 2027 data-center forecasts due to reduced visibility, supply constraints, and the possibility of slower spending by large cloud companies.
• It pegged that spending by large cloud companies on AI would grow slightly less in 2027 as compared to the current year.
• The firm said uncertainty around Huang’s tenure was another factor behind the downgrade. 

Nvidia (NVDA) shares rallied in early-morning trade on Wednesday after a two-day rout, on track to post their biggest single-day gain in over two months, although the stock witnessed a downgrade from Baird.

The firm downgraded Nvidia to ‘Neutral’ from ‘Outperform’ and slashed its price target by 60% to $200 from $500, according to TheFly. It cited questions about whether CEO Jensen Huang will stay on into 2027 and a possible slowdown in the AI buildout in its outlook.

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Adding to Wall Street’s bearish sentiment, Morgan Stanley removed Nvidia as its ‘Top Pick’ semiconductor stock but kept its ‘Overweight’ rating and $300 price target. The move comes after the firm had reinstated Nvidia as a ‘Top Pick’  just last month.

This comes after Bank of America also removed Nvidia and Micron Technology (MU) from its "US 1 List" on Tuesday, which represents the firm's preferred investment ideas.

NVDA Stock Rebounds After Two-Day Selloff

NVDA stock gained as much as 4% in pre-market trade, on track for its biggest uptick since late August. It was among the top-trending tickers on Stocktwits at the time of writing, with retail sentiment in ‘extremely bullish’ territory over the past day and ‘extremely high’ levels of chatter.

The pre-market recovery in NVDA stock comes after a decline of about 9.5% over the previous two sessions. Nvidia closed at $168.89 on Tuesday, just above its 52-week low of $164.27. The stock remains down about 10% for the year.

Baird’s revised $200 price target still implies roughly 18% upside from Tuesday’s close, not unlike others on Wall Street, who have also trimmed their price targets while continuing to see upside in the shares.

Baird Flags AI Spending, Supply Risks And CEO Uncertainty

Baird said it is holding off on publishing its 2027 data-center forecasts because visibility has deteriorated sharply in recent weeks. The firm said supply constraints are the main reason it sees a risk of slower growth, although softer demand could also contribute. 

It pegged that spending by large cloud companies on AI would grow by about 40% or slightly less in 2027.

While Baird noted that demand for Nvidia’s chips continues to exceed supply, and lead times for its H300 chips remain extended, it also flagged the risk that customers or partners could reduce orders earlier than expected, creating timing challenges for the company.

The firm said uncertainty around Huang’s tenure was another factor behind the downgrade. Nvidia’s CEO has come under scrutiny following reports about his personal conduct and a possible connection to a Chinese intelligence operation. 

Wall Street Analysts Reassess Nvidia Ahead Of Earnings

Morgan Stanley analyst Joseph Moore said the firm removed Nvidia as ‘Top Pick’ under the firm’s stop-loss policy for Top Picks, citing that the stock price has dropped more than 25% since October. 

It also noted that near-term uncertainty will remain around Nvidia given the contention that CEO Jensen Huang’s leadership is “crucial to the company’s strategic direction.” 

Others on Wall Street also have concerns around the investigation into Nvidia’s CEO. 

On Tuesday, Citi also reduced its target to $285 from $315, while retaining a ‘Buy’ rating ahead of Nvidia’s quarterly results. It stated that longer-term concerns about CEO succession and leadership stability remain and that the board’s investigation into Huang was a source of uncertainty.

The firm expects a "modest" earnings beat, with higher sales potentially offset by lower gross margins due to rising memory costs. 

Wells Fargo also lowered its price target to $300 from $315 on Tuesday and maintained an ‘Overweight’ rating. The firm expects Nvidia to deliver solid results for the October quarter, scheduled for after market close on November 17, but said investors will be looking for reassurance that the AI investment cycle can remain durable. 

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