(Nov 12): Nvidia Corp’s leadership turmoil is boosting potential beneficiaries, with Advanced Micro Devices Inc, Broadcom Inc and Alphabet Inc gaining after hours on bets they may win business from the chip giant.
AMD and Broadcom each rose more than 3% as Nvidia sank 9% after hours on reports its board is preparing to oust chief executive officer Jensen Huang, who led its rise to become, at one point, the world’s most valuable company. Alphabet rose 0.3% in extended trading.
The selloff followed reports about Huang’s extramarital affairs and intensified after the Wall Street Journal said the board was preparing to remove him. Nvidia is working with an outside firm to identify potential replacements for Huang.
As Nvidia confronts leadership uncertainty, rival hardware makers are gaining as investors seek continued exposure to the AI trade while hedging Nvidia-related risks. The turmoil underscores the potential for further volatility as investors assess its impact on AI development and the extent to which customers diversify their spending worldwide.
“This is where competitors like AMD, like Google Tensor Processing Units and Amazon will probably have a chance to improve their market share when it comes to that accelerator market that Nvidia dominates,” Mandeep Singh, global head of technology research at Bloomberg Intelligence, said. “There is no doubt that Nvidia won’t be as aggressive as they have been in the past two to three years when it comes to setting goals and overachieving them.”
Huang’s potential replacement will likely be “quite conservative” in company leadership, given the recent developments, he added.
AMD and Broadcom stand to likely gain the most if Nvidia’s leadership issues disrupt its customer relationships. AMD is Nvidia’s closest rival in AI graphics processing units and striving to loosen its grip on the market, while Broadcom has a growing role in custom AI chips and networking.
While a Nvidia leadership shakeup may push customers to rethink their reliance on a single supplier, competitors like AMD and Broadcom are already pursuing business in AI accelerators, custom silicon and networking.
“AMD as a direct competitor, and Alphabet and Broadcom in the TPU space, are natural beneficiaries in the short term,” said Anna Wu, an investment strategist and founder of Floodlines Research. “Huang’s scandal has raised public doubts about Nvidia’s commercial secrets and its product edge.”
Alphabet’s TPUs are custom-built for AI, while graphics processing units are multi-purpose chips originally made for gaming. TPUs can’t replace GPUs across the board, and moving AI workloads away from Nvidia is slow and costly, she added.
Alphabet announced this week plans to roll out a broader array of AI chips, aiming to capitalise on its rapid rise as a major challenger to Nvidia in a market worth hundreds of billions of dollars. The company is introducing two new variations of its TPUs.
Other beneficiaries include the companies powering hyperscalers’ in-house chips.
In Taipei, MediaTek Inc, which works with Google on custom silicon, rose as much as 3.3% in Taipei on Thursday. Design houses Alchip Technologies Ltd and Global Unichip Corp both jumped more than 8% in Taipei on hopes that rising budgets will flow into custom hardware.
Nvidia’s manufacturing partners appear largely insulated from the turmoil, given they also supply its rivals. But Samsung Electronics Co may have more to gain if the uncertainty at Nvidia leads to a shake-up in supplier relationships. Samsung outperformed memory rival SK Hynix Inc by more than one percentage point, while Taiwan Semiconductor Manufacturing Co was little changed.
Samsung has forged increasingly close ties with AMD, Nvidia’s biggest challenger in AI chips, while SK Hynix remains Nvidia’s primary supplier of high-bandwidth memory. During AMD chief executive officer Lisa Su’s visit to Seoul in March, Samsung agreed to collaborate with the US chipmaker on next-generation AI memory and computing technologies.
“A potential leadership change at Nvidia could create a strategic opening for Samsung,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. “If Jensen Huang were to leave, new management could reassess supplier relationships and place greater emphasis on diversifying its supply chain, giving Samsung an opportunity to deepen its partnership with Nvidia.”
Beyond the memory giants, a number of South Korean startups — including AI chipmaker FuriosaAI and Samsung-backed MangoBoost — are also seeking to chip away at Nvidia’s dominance with alternative technologies.
The scandal could also benefit Chinese companies working to replace Nvidia in their home market, as stricter export rules in the US intensify scrutiny of chip sales to China.
Any resulting tightening would provide a tailwind for local chipmakers such as Cambricon Technologies Corp, Hygon Information Technology Co and Semiconductor Manufacturing International Corp.
Cambricon rose as much as 13%, while Hygon and SMIC both climbed more than 5%.
China’s tech selloff began much earlier than in the US, and investors may be eyeing cheap Chinese tech stocks as a potential hedge if the US market downturn worsens, Wu said.
“But structurally, unless Chinese tech found a fix for advanced chips, I’d say it is difficult to penetrate Nvidia’s market share,” she said.
Uploaded by Evelyn Chan