Baird Securities downgrades Nvidia rating due to Chinese restrictions and concerns over AI demand

November 11 - On Wednesday, Baird Securities downgraded Nvidia (NVDA.O) and slashed its price target by 60%, citing mounting risks from US restrictions on chip sales to China (link) and a potential slowdown in artificial intelligence spending, which could hurt demand for its flagship chips.

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

• Nvidia's stock closed at $168.9 on Tuesday and is facing its biggest weekly loss since March 2025, with management uncertainty putting pressure on the share price

• The brokerage added that amid an investigation into CEO Jensen Huang's ties to a Chinese businesswoman (link) — who is allegedly involved in a spying operation — Nvidia shares may remain rangebound in the short term

• Baird Securities said that demand from Southeast Asian data center operators and China is crucial to the chipmaker, and that any preemptive measures or US government export restrictions (link) could weigh on revenue

• The firm added that, affected by supply bottlenecks and early signs of weakening demand, AI hyperscaler capital expenditure growth in 2027 may slow to about 40% year on year

• Demand for the Nvidia H300 chip exceeds supply; however, due to timing risks, 10%-30% of pre-orders may be at risk of being cut

• Morgan Stanley removed Nvidia from its top picks 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 No. 1 List," and at least three other brokerages, including Wells Fargo and Citigroup, lowered their price targets earlier this week

• On leadership, Baird Securities said: "The probability of a CEO change in 2027 is increasing. We see a greater likelihood of appointing an external CEO than an internal promotion."

• Nvidia is expected to report third-quarter earnings after the US market closes on November 17

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