Fallout from the Nvidia scandal may dampen the exuberance around the AI boom

Detailed summary

Nvidia CEO Jensen Huang’s stunning resignation has sent ripples through the global technology industry, with rival chipmakers itching to take advantage of the uncertainty and…

Nvidia CEO Jensen Huang’s stunning resignation has sent ripples through the global technology industry, with rival chipmakers itching to take advantage of the uncertainty and others wondering if the downfall of one of AI’s biggest cheerleaders will dampen the mood around the civilization-altering technology.

A linchpin of the AI boom, Nvidia trades off with Apple as Wall Street’s most valuable company and has invested heavily in other AI firms.

Some of Nvidia’s biggest rivals, such as Broadcom, Intel and Advanced Micro Devices, saw their shares advance Thursday following Huang’s departure as investors predicted that its customers will look to diversify their suppliers. In the end, analysts say, this might not be a bad thing.

“This could turn what has effectively been a monopoly into a horse race again, as competitors rush to meet growing demand,” said Bret Greenstein, chief AI officer at the global consultancy West Monroe. “Nvidia did not create that demand, and a shift in this part of the market could ultimately diversify the supply chain, create more choice for customers and strengthen the broader AI industry in the years ahead.”

Nvidia carved out an early lead in tailoring its chipsets known as graphics processing units, or GPUs, from use in powering video games to helping to train powerful AI systems. Demand soared as tech companies scrambled for more chips to build and run AI systems.

In annual filings, Nvidia has identified competitors including Advanced Micro Devices, or AMD, Intel, Broadcom and cloud services companies like Google, Amazon and Microsoft. While these other players are established and respected within the industry for their chips, they have been trying to catch up to Nvidia.

Nvidia has had an advantage from the start and as soon as a competitor releases something just as good, Nvidia has put out the next better chip, said Jay Aldebert, chief growth officer of International Services Inc. “Nobody’s just sitting still,” he said.

While some competitors…

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