Tech giants in the AI race have been spending billions of dollars for GPUs made by Nvidia, considered a leader when it comes to chips that power the technology
Nvidia Stock Rebounds Nearly 5% Despite Baird Downgrade as Jensen Huang Scandal Pressure Builds in Washington AFP

Nvidia Corp. shares rebounded nearly 5% on Wednesday after two days of heavy losses. A rally in artificial intelligence stocks outweighed a fresh analyst downgrade and growing political pressure on CEO Jensen Huang.

Nvidia stock traded at $177.16 in afternoon trading, up 4.96%. The world's largest chipmaker had lost about $430 billion in market value on Monday and Tuesday, after falling about 4.3% on Monday and 5.47% on Tuesday.

On Tuesday, the stock hit an intraday low of $165.89, its lowest level in six months.

AI trade gets a lift

The rebound came as strong quarterly results from CoreWeave, a major Nvidia customer, revived investor enthusiasm for AI infrastructure. CoreWeave beat forecasts and raised its full-year revenue outlook late Tuesday. A rally in South Korean chip stocks also helped sentiment.

Goldman Sachs analyst James Schneider said AI stocks were "clearly in oversold territory." He named Nvidia, Broadcom and AMD as top picks and kept his $300 price target on Nvidia.

Downgrades pile up

Not all analysts were convinced. Baird downgraded Nvidia to Neutral from Outperform and cut its price target to $200 from $500.

Baird said visibility had deteriorated enough that it would hold off on publishing 2027 data center forecasts. The firm also cited uncertainty over whether Huang will stay on into 2027, after reports about his personal conduct and a board investigation. Baird noted that demand for Nvidia chips still exceeds supply.

Morgan Stanley on Wednesday also removed Nvidia from its top-pick list. The shares had fallen more than 25% since the bank named the stock a top pick in early October.

Wedbush analyst Dan Ives warned that Nvidia shares could fall another 20% to 30% if Huang leaves the company. He also raised concerns about Nvidia's succession planning.

Scandal deepens in Washington

The selloff followed an Oct. 29 New York Times report linking Huang to Alice Huang. She is a former executive at Singapore-based Nvidia customer Megaspeed, and U.S. officials suspect her of working for Chinese intelligence. The two are not related. The allegations against her remain unproven.

Huang admitted to an affair in a Nov. 8 memo to staff.

Nvidia's board opened an investigation on Sunday. On Tuesday it said it had hired Joon H. Kim, the former acting U.S. attorney for the Southern District of New York, to lead the probe with law firm Wachtell, Lipton, Rosen & Katz. The review has so far found no sign that company secrets or national security were harmed, and the board continues to back Huang.

Political pressure is building. Republican Sen. Kevin Cramer of North Dakota told Politico that "the potential for extortion is so tremendous" and that Huang has "got to go."

House Foreign Affairs Committee Chairman Brian Mast and two other Republican committee chairs have asked Huang to attend a closed-door briefing on Nov. 18. Wednesday was the deadline for Huang to respond. As of Wednesday morning, Nvidia had not said whether he would attend.

China's Foreign Ministry has called the spying claims "groundless." President Donald Trump has confirmed an FBI inquiry while defending Huang, saying: "I really believe him."

Earnings next week

Investors are now looking to Nvidia's fiscal third-quarter earnings report, scheduled for Nov. 17.

Huang returned to Nvidia's offices Monday and continued holding meetings Tuesday, according to CNBC.

Some investors have used the selloff to buy shares. Cathie Wood's ARK Invest bought 90,443 Nvidia shares on Nov. 9, worth an estimated $16.2 million.

This article is for informational purposes only and does not constitute investment advice.