Susannah Streeter, Chief Investment Strategist, Wealth Club: ''Even Jensen Huang's superstar status could not eclipse the deep damage the scandal has wreaked on the Nvidia’s reputation. Even tech icons of his stature are not immune to being acountable to corporate responsibility. The emergence of the second affair, this one rumoured to be with an employee, appears to have been the last straw for the board. With the firm facing so many investigations – launched by the FBI and from Capitol hill, the board clearly wants to disassociate the company from Huang’s actions as much as possible.
Nvidia’s choice of interim CEO will be seen as a safe pair of hands given that Colette Kress has been at the company for 13 years and she’s clearly been brought into steady the ship. But she lacks global status and is unlikely to be able to forge such deep global commercial ties as Nvidia is set to enter into a period of uncertainty over strategic priorities, pricing, supply agreements and future product commitments. Nvidia has lost a strategic visionary, and it’s set to have repercussions right through the AI trade, given how the chip giant is right at the heart of this technological revolution. Nvidia has become something of a central bank for the AI trade. It is supplying the scarce resource needed to build and run AI, it's financing the build out partly by taking equity stakes in its customers and developing complex financial arrangements with private markets so its influence stretches far beyond its own shareholders. Nevertheless, given its highly dominant position and its deep cash pockets, it has some space to weather the storm but its rivals are set to seize this opportunity to capture some of its business.
AMD could emerge as one of the big winners in this vacuum and that’s being reflected in the share price. Broadcom could also benefit by helping the likes of Google and other tech giants design their own bespoke AI chips, reducing their reliance on Nvidia. Neither company has to knock Nvidia off its perch to benefit, as capturing even a relatively small additional slice of this rapidly expanding market could be hugely lucrative. The opportunity is to chip away at Nvidia's dominance rather than trigger an overnight changing of the guard.''
|
