AMD and Broadcom Rally This Week as Investors Rotate Out of Nvidia After Huang's Exit

Taiwan Semiconductor Manufacturing Co., which makes Nvidia's most advanced processors, has gained 11% over the same period, according to figures compiled by CNBC. The shift has also reached the less speculative end of the chip industry. Texas Instruments is up about 13% this week, Analog Devices 12% and Germany's Infineon 14%.

Investors appear to be reshuffling the AI trade rather than leaving it. Their bet is that turmoil at the top of the dominant supplier of AI accelerators gives competitors a chance to narrow its lead. "What you're seeing in markets now is a bit of a rotation into other advanced chip design companies, on the assumption that this will enable other companies effectively to catch up," Mark Franklin, head of multi-asset solutions for Asia at Manulife Investment Management, told CNBC.

Farzin Azam, managing director of equities trading at Mizuho Americas, said the move was visible on trading desks, with investors favouring chipmakers less exposed to Nvidia's management turmoil. "Names such as TSMC, names such as Broadcom, names such as Advanced Micro will come as winners of this because they don't have this overhang of a management disruption," he said.

Huang stepped down after revelations about several affairs, including one with a woman whom the US intelligence community believes to be a Chinese spy. Chief financial officer Colette Kress has been named interim chief executive.

Dylan Patel, chief executive of the research firm SemiAnalysis, said the longer-term risk lies in Nvidia's supply chain. According to Patel, Huang built personal relationships with manufacturers and component suppliers that helped Nvidia secure scarce production capacity ahead of rivals. Google and Amazon, which design their own AI chips, were already gaining ground on Nvidia in securing capacity and could move faster without Huang's influence over suppliers, he said.

"If Nvidia can't muster the supply chain, then technology is the only competitive advantage. And without Jensen, can they maintain technology advantages? Given they're only a year ahead of their biggest competitors, it's not like the gap is massive," Patel said.

Franklin said the wider AI investment cycle still looked intact. Large technology companies are projecting higher AI spending in 2027, with further increases possible in 2028. The bigger question, he said, is whether growing competition and open-source technology will eventually turn AI capabilities into a commodity, pushing down chip prices and investment returns.

Azam said Nvidia shares looked cheap relative to the company's expected earnings growth. He warned, however, that continuing investigations and uncertainty over management could limit any lasting recovery. He expects strong results when Nvidia reports on November 17 and said investors will be watching closely for management's plans to steer the company through the crisis.