Baird downgrades Nvidia on China curbs, AI demand worries

Nov 11 – Baird downgraded Nvidia and cut its price target by 60% on Wednesday, citing growing risks from US restrictions on chip sales to China and a potential slowdown in AI spending that could weigh on demand for its prized chips.

• The brokerage downgraded the chip giant to “Neutral” from “Buy” and cut its price target to $200 from $500

• Nvidia’s shares closed at $168.9 on Tuesday and are on track for their biggest weekly drop since March 2025, with uncertainty over top leadership weighing on the stock

• The brokerage added that Nvidia shares are likely to remain range-bound in the near term given the investigation into CEO Jensen Huang’s relationship with a Chinese businesswoman that is allegedly part of a spying operation

• Demand from Southeast Asian data-center operators and China is crucial for the chip company, and any pre-emptive or US government restrictions on exports could weigh on revenues, Baird said

• AI hyperscaler capex growth could slow to about 40% year-on-year in 2027, bogged down by supply constraints and early signs of demand softening, it added

• Demand for Nvidia’s H300 chips outpaces supply; however, due to timing risks, 10-30% of pre-emptive orders could be exposed to potential cuts

• Morgan Stanley removed Nvidia from its top pick list after the stock fell more than 25% since being named a top pick a month ago

• BofA Global Research also removed Nvidia from its US 1 List and at least three other brokerages, including Wells Fargo and Citigroup, reduced their price targets earlier this week

• On the leadership front, Baird said, “The odds of CEO transition are increasing into 2027. We think the odds favor an outsider being hired as CEO versus someone promoted from within”

• Nvidia is expected to report third-quarter results after markets close on November 17

(Reporting by Darshan Kumar and Johann M Cherian in Bengaluru; Editing by Vijay Kishore)