Analysis-Investors worry the AI trade needs Nvidia’s Huang and its largesse

Investors are concerned that the ouster of Nvidia CEO Jensen Huang could weaken the company's support for the AI boom, placing additional pressure on the world's most crowded trade. The board of Nvidia, the dominant chipmaker and trailblazer in computing, is meeting to determine Huang's future amid reports of extramarital affairs.

In response, Nvidia shares and those of its customers, such as data-center firms CoreWeave and Naver, were initially punished while rivals Broadcom and AMD saw their stocks rise. Chinese GPU makers' shares surged, anticipating greater market share. However, the market worries that if Nvidia, under a different leader, retreats from financing data centers, the AI boom may lose momentum.

Jun Bei Liu, a portfolio manager, emphasized the uncertainty surrounding the situation, not just for Nvidia but for the entire AI ecosystem. Nvidia's CEO has been instrumental in driving the AI revolution, with its chip technology ahead of rivals and generating a 900% increase in share price over four years since the launch of OpenAI's ChatGPT.

Despite the focus remaining on leadership, the AI trade's demand is not solely dependent on an individual. Nvidia has committed $164.5 billion in financial obligations, with a $105 billion cap on an OpenAI data center in Ohio and lease and other capacity guarantees topping $50 billion.