AMD, Broadcom, Alphabet poised to gain from Nvidia scandal

Detailed summary

Alphabet rose 0.3% in extended trading.

Nvidia’s leadership turmoil is boosting potential beneficiaries, with Advanced Micro Devices, Broadcom and Alphabet 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 shake up may push customers to rethink their reliance on a single…

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