NvidiaInvestors are betting that Jensen Huang’s departure will weaken the AI chip giant’s grip on the industry it has long dominated, and the company’s financial crisis is opening up not only its partners but also its biggest rivals.
from AMD to broadcom And even your partner TSMCChipmakers have emerged as potential beneficiaries of this disruption, with market watchers pointing to a possible redistribution of manufacturing capacity and the possibility that Nvidia’s technology lead could shrink.
“What we’re seeing in the market right now is a bit of rotation to other advanced chip design companies. The assumption is that this will allow other companies to catch up effectively,” said Mark Franklin, head of multi-asset solutions for Asia at Manulife Investment Management.
The change comes as Nvidia grapples with the fallout from Hwang’s resignation following revelations about his multiple relationships, including one with a woman who U.S. intelligence agencies believe is a Chinese spy.
Franklin emphasized that Huang’s departure could give competitors an opportunity to close the gap as Nvidia overcomes leadership uncertainty, adding that the rotation has already helped drive positive momentum in other semiconductor stocks.
Farzin Azam, managing director of equity trading at Mizuho Americas, said the changes are also evident on trading desks as investors move to chip makers that are less exposed to Nvidia’s disruption.
“Companies like TSMC, Broadcom and Advanced Micro are going to be the winners in this because they don’t have this kind of operational disruption,” Azam told CNBC.
Nvidia stock is down 11% so far this week, while rivals AMD and Broadcom are up 30% and 24%, respectively.
TSMC, which makes Nvidia’s most advanced processors, also rose 11% over the same period, as it stands to gain regardless of which chip designers gain or lose. Staying away from AI names that are perceived as risky positions TSMC as a relatively safe play for those who are bullish on the overall theme.
He said the exodus from Nvidia is also spreading to less speculative parts of the semiconductor industry, including analog chipmakers such as Texas Instruments, Analog Devices and Infineon, as investors become more defensive.
Texas Instruments is up about 13% this week, while Analog Devices and Germany’s Infineon are up 12% and 14%, respectively.
Nvidia’s dominance is cracking
Beyond the immediate market reaction, Hwang’s departure could fundamentally reshape competition across the AI supply chain, said Dylan Patel, CEO of semiconductor research firm Semianalysis.
Patel said Huang personally cultivated relationships with manufacturers and component suppliers, helping Nvidia secure scarce manufacturing capacity ahead of its competitors.
That advantage could come under pressure as companies like Google and Amazon strive to expand production of AI chips.
Patel said the two hyperscalers already have a supply chain capability advantage over Nvidia, and could accelerate those efforts even without Huang’s influence over suppliers.
“If Nvidia can’t get their supply chain together, their only competitive advantage is technology. And without Jensen, can they maintain their technology advantage? Considering they’re only a year ahead of their biggest competitor, it’s not a huge gap,” Patel said.
The challenge is especially acute as hyperscalers increase development of their own AI chips to reduce dependence on Nvidia, while AMD and other semiconductor companies compete to capture a larger slice of the market.
But this upheaval does not necessarily signal the end of the broader AI investment boom.
Franklin noted that big tech companies are forecasting an increase in AI spending in 2027, with the potential for further increases in 2028, suggesting the investment cycle remains structurally intact even as investors reassess which companies stand to benefit.
The bigger question, he said, is whether increased competition and the proliferation of open source technologies will eventually commoditize AI capabilities, putting pressure on chip prices and investment returns.
For Nvidia, its near-term outlook may depend less on revenue and more on whether its incoming management team can reassure investors.
Azam said the stock looks cheap compared to earnings growth prospects, but warned that ongoing investigations and management uncertainty could limit a sustained recovery.
He expects Nvidia’s earnings to be announced on November 17th to remain strong and investors likely to focus more on management’s plans to overcome the crisis.
The result could be a change of winners in the semiconductor industry, and Mr. Franklin said investors are becoming more comfortable staying invested while rotating and diversifying their portfolios rather than abandoning the market altogether.
