Investors worry the AI trade needs Nvidia’s Jensen Huang and its largesse

Detailed summary

Investors fear Nvidia chief Jensen Huang’s exit could slow AI funding and unsettle global markets as the chipmaker faces board scrutiny. Read more at straitstimes.com.

The board of the world’s dominant chipmaker, at the cutting edge of computing, was meeting late on Nov 11 to decide Huang’s fate.

SINGAPORE – Investors fear an ouster of chief executive officer Jensen Huang might dampen Nvidia’s willingness to bankroll the AI boom, in yet another pressure point on the global markets’ most crowded trade.

The board of the world’s dominant chipmaker, at the cutting edge of computing, was meeting late on Nov 11 to decide Huang’s fate as it grapples with reports of two extramarital affairs involving its longtime leader.

Traders’ first reaction was to punish Nvidia shares and those of its customers, including data-centre firms CoreWeave and Naver, while pushing shares of chipmaking rivals Broadcom and AMD higher.

Shares in China’s leading makers of graphics processing units (GPUs) surged on Nov 12, as mounting turmoil at Nvidia boosted expectations that local chip suppliers could win greater market share. Moore Threads, MetaX and Cambricon all jumped nearly 10%.

But the worry in the market is that the stakes are far higher and that if Nvidia – under a different leader – backs away from a strategy of financing data centres, then the AI boom itself loses momentum.

“He’s the face of Nvidia and Nvidia has been front and centre of the AI build-out,” said Jun Bei Liu, lead portfolio manager at Ten Cap, a fund manager in Sydney.

“There’s just a lot of uncertainty to come... not just for Nvidia; it’s for the whole AI – all the businesses that they co-invest and sponsor,” she said. “I think the fear is that the music might stop.”

Nerves, plus the 8% after-hours drop in Nvidia stock, sent Nasdaq 100 futures down nearly 1% in Asia.

Opening of the article, excerpted from The Straits Times. To read the rest, open the article on the publisher's site.