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Jensen Huang quit as Nvidia's chief executive on November 12 amid an affair scandal with spy concerns, leaving an interim CEO and requests from Congress for him to testify. Cloud companies that rely on one chip supplier may spread orders to other chipmakers. That would help Advanced Micro Devices and hurt Nvidia.
Source: WSJ ↗
When a dominant supplier runs into trouble, customers look for a second source, and smaller rivals gain the most from each order that moves.
Chief financial officer Colette Kress became interim CEO while keeping her CFO role. Huang also left NVIDIA Corporation's (NVDA) board immediately, and the board is searching for a permanent leader. A Senate committee has asked Huang to testify on December 3, and three House committees have requested a closed-door interview on December 1. Nvidia has opened an independent inquiry into whether Huang was targeted by a foreign intelligence effort. AI data centers depend heavily on Nvidia chips. When a key supplier faces a leadership gap and a security inquiry, big buyers have reason to line up a second source. Advanced Micro Devices (AMD) makes rival AI chips. Nvidia's sales were about seven times AMD's in recent quarters, so a small slice of moved orders would matter much more to AMD.
Share prices reacted fast. Nvidia fell 4.3% on November 12 and 8.5% over five trading days. Advanced Micro Devices (AMD) rose 44.7% over five trading days. That jump came mostly from AMD's own news: record third-quarter results on November 3 and a forecast of more than 80% revenue growth next year. A Bank of America price-target raise to $700 followed on November 12. Still, on the day Huang quit, AMD rose 5.9% while Nvidia server and memory partners fell, a hint that some investors are betting on a shift away from Nvidia.
The earliest test is Nvidia's third-quarter results on November 17. A strong report with steady guidance would support the board's claim that customer commitments continue without interruption. Chips for data centers are ordered months ahead, so buyers may simply stay with Nvidia while its products and supply remain the same. If the congressional interviews on December 1 and December 3 find no security breach, and the board names a permanent CEO quickly, the shift to rivals could be small.
A CEO change does not alter the chips Nvidia sells. Switching to another chip family takes software work that buyers rarely rush. If the hearings lead to tighter rules on AI chip sales to China, every US chipmaker could be hurt, not only Nvidia.
Nvidia's longtime boss is gone from both the CEO job and the board. The finance chief is running the company while still doing her old job, and the board searches for a new CEO. Congress also wants answers in December about whether a suspected Chinese spy got close to him. So Nvidia faces weeks of uncertainty at the top.
Most AI data centers run on Nvidia chips, so buyers depend on one supplier. A restaurant that gets all its bread from one bakery starts calling other bakers when the owner suddenly leaves. Big cloud companies have the same reason to line up a backup chip supplier, even if their Nvidia orders stay in place.
Advanced Micro Devices (AMD) makes rival AI chips, so it is the natural backup. Nvidia's quarterly sales were about seven times AMD's, which means a small slice of Nvidia's business would be a big gain for AMD. That is why AMD could gain while Nvidia could lose some orders.
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