Baird Cuts Nvidia to Neutral, Slashes Price Target 60% on China and AI Spending Risks

Baird downgraded Nvidia's stock rating to "neutral" and slashed its price target by 60%, citing concerns over potential tighter US chip sales restrictions to China and a possible slowdown in AI spending that could hurt demand. The brokerage cut its target price from $500 to $200, noting that Nvidia's stock closed at $168.90 yesterday and is on track for its worst weekly decline since March last year, partly due to leadership uncertainty. Baird also flagged that an investigation into CEO Jensen Huang's ties with a Chinese businesswoman could keep shares range-bound short-term. Baird warned that demand from Southeast Asian data center operators and China is crucial, so any US export curbs could impact revenue. It also projected hyperscale cloud providers' capital expenditure growth may fall to about 40% next year, with 10-30% of Nvidia's H300 chip orders at risk of cancellation. Additionally, the firm sees a rising chance of a CEO change next year, likely favoring an external hire.