Nvidia faces scrutiny after CEO’s affair sparks espionage concerns

China has refuted the espionage allegations, labeling them as “smears against China.” Analysts at Baird, including Tristan Gerra, warn that the U.S. government may restrict Nvidia’s ability to export advanced chips, particularly the H200, to China and limit its international business operations. This could significantly impact Nvidia’s stock performance.

Republican members of Congress have requested Huang’s participation in a closed-door hearing later this month to address concerns regarding GPU exports and potential legal loopholes. Baird maintains an outperform rating on Nvidia, with a price target of $500, representing a substantial potential increase from Friday’s closing price.

Nvidia’s stock experienced a premarket decline of approximately 6% on Monday, following a near 8% drop last week as the reports intensified and broader tech stocks faced challenges. The New York Times initially reported on the alleged Chinese spy targeting Huang on October 29. While many firms have retained their ratings and price targets, analysts anticipate a prolonged period of uncertainty surrounding Nvidia.

Bernstein has an outperform rating and a $400 price target, suggesting the negative impact could linger. Raymond James maintains a strong buy rating and a $515 price target, anticipating strengthened support for legislation like the MATCH Act, which aims to further restrict sales to China. Clear Street highlights the risk to sentiment and valuation due to governance concerns. Melius Research maintains a buy rating and a $315 price target, suggesting that while competitors like Broadcom and AMD might appear to benefit, the current compute shortage and the ongoing AI advancements are likely to overshadow these concerns.