Bursa slips at open despite Wall Street gains

Asian stocks experienced mixed results on today's market as the fallout from Nvidia's leadership crisis took hold. Despite this, the MSCI Asia Pacific Index rose by 0.2%, with gains seen in Japan, South Korea, and Taiwan. The strong performance in the US market, with the Nasdaq 100 jumping 2.3% and on track for its best week since May, contributed to optimism around AI.

CoreWeave Inc. surged 25% on a positive outlook, while OpenAI's quarterly revenue hit $10 billion and Anthropic PBC's initial public offering was oversubscribed multiple times. However, these positive sentiments were tested as Nasdaq 100 futures dropped 0.8% and S&P 500 contracts lost 0.4% following Nvidia's sharp 8% decline in late trading.

The controversy surrounding Nvidia intensified when the company's board discussed CEO Jensen Huang's future amid a leadership crisis. Huang admitted to an affair with a woman reportedly linked to China, according to sources familiar with the matter. Speculation also arose about Huang's relationship with Nvidia's healthcare vice president, Kimberly Powell, according to the New York Times.

This turmoil poses a particular risk for Asian markets due to their vital role in Nvidia's supply chain, which includes major players like Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co., and SK Hynix Inc. The dominant supplier of chips powering AI is facing potential upheaval at Nvidia, which could shake confidence in the trade that has driven much of this year's global equity rally.

Gary Tan, portfolio manager at Allspring Global, believes that while Nvidia's developments could weigh on sentiment across the broader AI trade, there are selective opportunities emerging among semiconductor companies that can provide credible second-source alternatives for critical AI chips. Near-term, investor reception to Anthropic's IPO is expected to be a more important driver of AI sentiment.

The fallout from Nvidia's crisis extended to AI-related stocks in late US trading. Super Micro Computer Inc., Dell Technologies Inc., Advanced Micro Devices Inc., and Broadcom Inc. all experienced declines, with some investors speculating that these companies could benefit from Nvidia's troubles.