Nvidia (NVDA.US) ends two-day losing streak and announces hiring of a renowned law firm to investigate matters related to CEO Jensen Huang

According to Zhihu Finance APP, NVIDIA (NVDA.US) shares rose by 2.87% on Wednesday, ending a two-day losing streak. The stock had fallen by 4.3% and 5.47% on Monday and Tuesday, respectively. Recently, ongoing personal controversies surrounding CEO Jensen Huang have fueled investor concerns about management stability, corporate governance, and potential business risks.

On Tuesday, NVIDIA announced it has hired the renowned law firm Wachtell, Lipton, Rosen & Katz to conduct an internal investigation to assess whether the related incidents could potentially impact the company's interests and business operations. The results of the investigation have not yet been released, and the market is closely monitoring the developments and their possible effects on the company.

According to media reports citing sources familiar with the matter, after returning to the office on Monday, Jensen Huang sought to signal that business was continuing as usual. He also chaired meetings in the office on Tuesday. As NVIDIA is set to release its quarterly report on November 17, investors are evaluating whether the uncertainties could impact the company’s operations and future growth.

In a research note released Tuesday, Bank of America analyst Vivek Arya outlined three possible scenarios. The first is that the impact of the incident is contained, management remains stable, and operations continue without significant disruption. The second scenario is that uncertainties persist, putting pressure on NVIDIA’s valuation prior to the results release. The third is that the situation escalates further, leading to changes in management or stricter regulatory oversight, forcing the market to reassess the company's profit outlook.

Zacks Chief Equity Strategist John Blank stated that the recent sell-off in NVIDIA reflects investor concerns about the evolution of the situation and potential regulatory risks. He believes the incident could negatively impact both NVIDIA and Jensen Huang personally, as well as dampen investment sentiment for the entire AI sector.

Meanwhile, Morgan Stanley announced on Wednesday that it has removed NVIDIA from its top picks list. The bank noted that since adding NVIDIA as a top pick on October 2, the stock has fallen by more than 25%, triggering the research department's stop-loss policy for top picks.

Morgan Stanley analysts emphasized that Jensen Huang's leadership is critical to NVIDIA’s strategic direction. However, the adjustment does not signal a change in the bank’s long-term fundamental view of NVIDIA. Morgan Stanley maintains an “Overweight” rating on NVIDIA and a 12-month target price of $300.

The bank believes that global AI infrastructure construction still enjoys strong and sustainable growth momentum, and NVIDIA’s leading position in AI computing is likely to continue. However, in the short term, uncertainty surrounding company management may still put pressure on market sentiment.

As NVIDIA prepares to announce its quarterly results, investors will not only focus on demand for AI chips, revenue growth, and future guidance, but also closely watch whether management can stabilize market confidence and whether the related events will have further impact on business operations.