Nvidia's Leadership Crisis Sends Rivals Surging as Investors Rotate

Nvidia (NVDA) shares fell 11% this week as investors rotated into rival chipmakers, betting that Jensen Huang's resignation could loosen the company's grip on the AI chip market.

Huang resigned Thursday following revelations about multiple affairs, including one with a woman believed by the U.S. intelligence community to be a Chinese spy. The upheaval has created an opening for competitors and partners alike, with market watchers pointing to a possible redistribution of manufacturing capacity and a narrowing of Nvidia's technological lead.

Mark Franklin, head of multi-asset solutions for Asia at Manulife Investment Management, said markets were seeing a rotation into other advanced chip design companies on the assumption that this would let other companies catch up. Franklin added that Huang's departure could give competitors an opportunity to close the gap.

Farzin Azam, managing director of equities trading at Mizuho Americas, said the shift was evident on trading desks, with investors moving toward chipmakers less exposed to Nvidia's management turmoil. Azam said names such as TSMC, Broadcom and Advanced Micro would come out as winners because they did not carry the overhang of management disruption.

Nvidia shares have plunged 11% so far this week, while rivals AMD (AMD) and Broadcom (AVGO) have gained 30% and 24%, respectively. TSMC (TSM), which manufactures Nvidia's most advanced processors, has also rallied 11% over the same period, as it stands to benefit irrespective of which chip designer gains or loses.

The rotation has extended into analog chipmakers such as Texas Instruments (TXN), Analog Devices (ADI) and Germany's Infineon, as investors adopt a more defensive stance. Texas Instruments has climbed about 13% this week, while Analog Devices and Infineon have advanced 12% and 14%, respectively.

Beyond the immediate market reaction, Huang's exit could reshape competition across the AI supply chain, according to Dylan Patel, chief executive at semiconductor research firm SemiAnalysis. Patel said Huang had personally cultivated relationships with manufacturers and component suppliers, helping Nvidia secure scarce production capacity ahead of rivals. That advantage could now come under pressure as companies including Google and Amazon strive to expand AI chip production.

Patel said that if Nvidia could not muster the supply chain, technology became the only competitive advantage, and that without Jensen it was unclear whether Nvidia could maintain its technology lead given it was only about a year ahead of its biggest competitors.

Franklin noted that major technology companies are projecting higher AI spending in 2027, with further increases possible in 2028, signaling the investment cycle remains structurally intact even as investors reassess which companies stand to benefit.

Azam said the stock appeared inexpensive relative to its earnings growth prospects, but warned that ongoing investigations and management uncertainty could limit any sustained recovery. He expects Nvidia's earnings due Nov. 17 to remain strong, with investors likely to focus more closely on management's plans for navigating the crisis.

In delayed trading Thursday, Nvidia was down 4.3%, AMD up 5.9%, Broadcom up 5.5%, TSMC down 1.9%, Texas Instruments up 0.9% and Analog Devices flat.

What remains unclear

Whether the rotation endures depends on Nvidia's next leadership team and the outcome of the independent investigation led by lawyer Joon Kim and Wachtell, Lipton, Rosen & Katz, which Nvidia retained to probe the allegations. Nvidia did not immediately respond when asked whether the probe's scope would expand after reports of a second affair with an Nvidia executive.