Nvidia gets rare downgrades and a Senate call to oust Huang, yet the stock rebounds 2.9%

Update to our report on the Wachtell-led probe: Wall Street and Washington both moved against Nvidia on Wednesday, and the stock rose anyway. Nvidia closed up about 2.9%, near $173.73 by our arithmetic from Nasdaq.com data (previous close $168.89), after CNBC reported two straight days of losses. The shares are still about 27% below their October 6 peak on our chart.

What the analysts did

Fox Business reported that Baird cut Nvidia to "neutral," citing a lack of visibility into 2027 data center spending, possible demand softness and uncertainty over Huang's tenure. Fox also reported that Morgan Stanley removed Nvidia from its Top Pick list while keeping an "overweight" rating, and that Bank of America took it off its U.S. 1 List. Morgan Stanley said the shares had fallen more than 25% since it named them a top pick on October 2, and that Huang's leadership is "crucial" to the company's direction, per CNBC.

The detail worth noticing: two of the three moves are removals from favorites lists, not rating changes. Only Baird actually lowered its rating, and its stated reasons are mostly about 2027 spending, not the scandal alone. Read that way, the day was less a verdict on Huang than a reset of how much conviction the biggest research desks are willing to attach to the name before November 17.

Bank of America's three scenarios

According to CNBC, BofA analyst Vivek Arya laid out three outcomes in a Tuesday note: the impact is contained and leadership continues; prolonged uncertainty pressures the valuation before earnings; or the matter escalates with "adverse findings, leadership disruption or tighter restrictions requiring earnings reassessment." The board has said it has no reason to believe national security or company secrets were compromised, and no finding about Huang or the company has been made public.

The political line

Business Insider, in a report shared with POLITICO, said Sen. Kevin Cramer, a Republican on the Senate Banking Committee, told POLITICO that "he's got to go," calling the potential for extortion a national security risk. Larry Kudlow, a former National Economic Council director, urged Huang to resign hours earlier, the report says. Both are public statements of opinion. They are not findings, and Nvidia did not immediately respond to the request for comment.

Why it matters for the stock: the Banking Committee has jurisdiction over legislation that could limit chip sales to China. Business Insider says three such bills are under consideration for the must-pass defense authorization bill, and the scandal has raised the odds they ride along. That is the channel from a personal story to revenue. For the China export backdrop, see our report on the H200 blacklist.

What to watch

• Nvidia reports third-quarter results on November 17, and a House briefing has been requested for November 18, as we reported earlier.
• Whether more firms follow Baird, or whether the list removals are the extent of it.
• Any 8-K from Nvidia on leadership, on SEC EDGAR.
• Whether the defense bill text picks up the chip-export measures.

Sources: Fox Business, CNBC and Business Insider, linked above; Nasdaq.com for the quote and 52-week range ($164.27 to $243.37, checked 4:26 PM ET); chart data via Yahoo Finance. The closing price is derived from the previous close and the percentage CNBC reported. We could not open the Baird, Morgan Stanley or BofA notes themselves. This is market information, not investment advice.