There are at least three major impacts from the ignominious exit of Jensen Huang from chipmaker Nvidia.
-- Terrible for Nvidia. Investors are trying to price in what happens to a company with no succession plan when the superstar CEO is ousted. The provisional answer: Nothing good. At their low yesterday, shares were back down to where they stood two years ago, and although they've bounced back more than 10% are still down a third from their high early last month.
-- Great for competitors. Rival chipmakers Broadcom and Advanced Micro Devices, AMD, have been having a standout week, up 24% and 30% respectively by Thursday's close. Nvidia's management upheaval, strategic uncertainty and the blow to corporate morale give competitors a chance to win over Nvidia customers.
-- Clouded for Nvidia's partners. We don't know what strategy Nvidia's new leadership will follow, but any change to its practice of financing customers-including buying shares in "neocloud" data-center operators and offering complex guarantee structures, one worth $105 billion-would be dire for the most-indebted businesses. This week, shares in Nvidia-backed CoreWeave, Nebius, Iren, Coherent and Marvell Technology have been highly volatile.
The impact for the broader AI trade remains a question mark. The chance of Nvidia chips being barred from China entirely is much higher now, without Huang lobbying for exports. That could make chips more available in the U.S., which would be good for the hyperscalers of Alphabet, Amazon, Meta and Microsoft, although their shares didn't benefit much this week, and Microsoft was down even before being hit by a global outage.
If investors conclude there will be less investment in data centers, watch the memory-chip and storage makers, Micron, Korea's SK Hynix and Samsung Electronics, SanDisk, Western Digital and Japan's Kioxia.
Just how crucial was Huang's leather-jacketed charisma for AI sentiment? Next week's IPO of AI model-maker Anthropic will be an excellent test of investor hope.