Nvidia shares face pressure as HSBC cuts rating on CEO succession, export risks
Leadership uncertainty and tougher trade controls are clouding Nvidia's near-term outlook as the chipmaker searches for a permanent chief executive. HSBC says the stock is likely to struggle until a new CEO is named and shows execution ability, while tighter export restrictions could also weigh on future earnings.
Highlights
- HSBC downgraded Nvidia to hold from buy, slashing its price target to $170 from $365 due to concerns over permanent CEO succession.
- HSBC estimates U.S. export restrictions could reduce Nvidia's fiscal 2028 earnings per share by 13% and add significant downside risk.
- Nvidia could lose 11% of projected fiscal 2028 revenue if additional export bans are imposed, driving EPS down to $13.57 versus a $15.77 consensus.
Succession concerns and earnings risk
As reported by CNBC, HSBC analyst Frank Lee downgraded Nvidia to hold from buy, arguing that uncertainty over permanent leadership is likely to persist until the company names a successor to replace Jensen Huang and the new chief executive demonstrates an ability to execute.Lee said his price target is now $170, down from $365, implying upside of about 2.3% from Thursday's close. He said uncertainties are set to prevail until a permanent succession plan is laid out, with CFO-turned-interim-CEO Colette Kress currently leading the company.
Lee also warned that tighter export restrictions on Nvidia products could become a serious issue for the chipmaker. He estimates that such limits could reduce Nvidia's fiscal year 2028 earnings per share by 13%.
Restrictions seen weighing on outlook
According to Lee, 11% of Nvidia's total revenue over the past six quarters came from countries outside the U.S. and Taiwan, markets he believes could become the focus of additional restrictions.His sensitivity analysis suggests that if Nvidia loses 11% of its projected fiscal 2028 revenue, earnings per share could fall to $13.57 from a base-case estimate of $15.65. That bear-case figure is also 14% below the current consensus estimate of $15.77, pointing to broader downside risk for investor expectations in the semiconductor sector.
Earlier, we reported on Nvidia’s CEO resignation fallout, which raised investor concerns over governance and legal risks.
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