Should You Buy Nvidia Stock Now? Retail Traders Rush In as Wall Street Cuts Targets After Jensen Huang Quits

Nvidia's stock has fallen to its lowest levels in months after the sudden resignation of co-founder and chief executive Jensen Huang. That has investors asking a familiar question: is this a buying opportunity, or a falling knife?

Small investors and Wall Street professionals have given very different answers so far. Retail traders have rushed to buy the dip, while analysts have spent the week cutting price targets and downgrading the shares.

Nvidia traded at about $162 on Friday morning, down roughly 2.4% from Thursday's close of $166.19. The stock fell as much as 13% on Thursday before recovering to end the day down 4.34%. It is down more than 20% over the past month and is heading for its worst week in more than a year.

Retail traders rush in

Individual investors have been aggressive buyers. On Thursday, the stock drew the biggest opening bid from individual traders ever recorded by Vanda Research. Small investors bought a net $111 million of Nvidia stock in the first 30 minutes of trading.

A poll on social investing platform Stocktwits found that 58% of respondents were buying the dip, while 42% were staying away.

Many retail buyers point to valuation. After the sell-off, Nvidia's forward price-to-earnings ratio has fallen below about 12 to 13 times expected earnings. That is unusually low for a company whose revenue has been growing about 60% a year on the back of artificial intelligence demand.

Wall Street turns cautious

Professional analysts have been more cautious. At least 10 Wall Street analysts turned more bearish this week, according to FactSet. The average price target fell to about $217 from about $343, according to Benzinga data, though most firms still rate the stock a Buy.

Truist downgraded Nvidia to Hold from Buy and cut its price target to $174 from $346. The firm acknowledged that the valuation "looks incredibly attractive," but said "risks are more relevant than valuation." Truist said the risks make it hard to forecast revenue or earnings with "enough confidence" to keep a Buy rating.

Craig-Hallum also moved to Hold, cutting its target to $180 from $275. The firm said Huang's departure "creates a big hole" that will be very difficult, if not impossible, to fill.

Bernstein's Stacy Rasgon downgraded the stock to Market Perform and halved his target to $200 from $400. Rasgon acknowledged the temptation to buy the dip, but said he remains worried that further revelations could complicate the recovery. He also called the appointment of Colette Kress as interim CEO a positive.

Baird cut its target to $200 from $500 and downgraded the stock to Neutral. Melius Research downgraded it to Hold with a $185 target. Oppenheimer moved to Perform and withdrew its target, citing concerns about keeping engineering talent.

The bull case

Not everyone has turned negative. Goldman Sachs analyst James Schneider cut his target to $220 from $300 but kept a Buy rating, calling Huang's departure "a meaningful but manageable negative event."

DA Davidson lowered its target to $200 from $300 and also kept a Buy rating. Analyst Gil Luria said he expects Nvidia to maintain its product leadership, though probably without orchestrating the AI ecosystem the way Huang did. Citi trimmed its target to $225 and Wells Fargo kept an Overweight rating with a $300 target.

Fundstrat's Tom Lee has urged investors to buy the dip, calling Nvidia the best risk/reward in AI.

Supporters argue that Nvidia's dominance in AI chips, its long order backlog and its software ecosystem do not depend on any one person. They say the stock's valuation now builds in a lot of bad news.

The risks

Skeptics point to several unknowns.

Huang ran Nvidia for 33 years and was deeply involved in its strategy, product road map and customer relationships. Analysts have warned of "key man" risk. That means the company could struggle to keep its pace of innovation, hold on to top engineers and maintain relationships with major customers without him.

The circumstances of his exit add more uncertainty. Huang resigned after admitting to an extramarital affair, following reports linking him to Alice Huang, a former Megaspeed International executive whom U.S. officials suspect of ties to Chinese intelligence. The Justice Department says it has reached no conclusion on whether she is a spy, and China denies the allegations. Reports of relationships with two Nvidia employees followed. Huang has not publicly confirmed those reports. Lawmakers are examining whether Nvidia chips reached China despite export controls.

Truist cited concerns about Nvidia's workplace culture and reports that its chips may have reached Chinese companies and government agencies. DA Davidson flagged possible disruption to Nvidia's Asia business as a short-term risk.

Earnings Tuesday is the next test

The next big catalyst comes Tuesday, Nov. 17, when Nvidia reports fiscal third-quarter results. It will be Kress's first earnings report as interim CEO.

"Nvidia's strength has always come from its people," Kress said in a statement Thursday, adding that she was "committed to building on the extraordinary foundation Jensen created over the last 33 years."

Investors will look for signs that demand for AI chips remains strong, for the company's revenue forecast, and for any update on the CEO search.

A strong report could steady the stock. A weak forecast or more revelations about the scandal could push shares back toward Thursday's lows near $149.

What history suggests

Market strategists often caution that "buying the dip" works best when a company's fundamentals are intact and the source of the decline is temporary. Whether the Huang scandal fits that description is the central question for Nvidia investors.

Some analysts noted that the shares could stay volatile until Nvidia names a permanent CEO and the investigations into Huang's ties are resolved.

For long-term investors, the decision may come down to whether they believe Nvidia's lead in AI computing can outlast the loss of the founder who built it.

This article is for informational purposes only and does not constitute investment advice. Investors should do their own research or consult a licensed financial adviser before making investment decisions.