Good afternoon. Unexpected news to come back to after my mini-break as news of Jensen’s resignation dominated the day (CFO Colette Kress interim CEO). QQQs -30bps held in ok after a -1.5% open and a stretch in the green late morning, with NVDA -4.3% closing well off its -14.3% lows. Vanda said it was the biggest NVDA open retail has ever bought:
Overall, we heard fast-money covering the stock this morning, but didn’t hear many excited about buying with most thinking it’s likely to chop around into and after the quarter next week.
Semis -25bps also climbed out of its 3.5% early morning hole as the perceived winners from the whole Jensen saga ripped: AMD +6%; AVGO +5.5%; ANET +5%; CLS +5% (TPU exposure); GOOGL +1.8% the big winner outside of semis.
Outside of that, neoclouds pulled back a day after rallying post-CRWV as NBIS’s guide cut took the space down (NBIS -17%; CRWV -7%), as well as some glass half empty reads for the space after the departure of the AI financing kingmaker. China names hit on the remote control rule and potential Megaspeed/Singapore crackdown …. (BABA -7% a Megaspeed Customer; VNET -11%; GDS -11%).
More deets on the read-throughs:
On AMD, bulls say you get Helios share gains, extra TSM Capacity and talent shift from NVDA but bears will push back saying OAI and neoclouds demand runs through same NVDA financing channels. Arcuri at UBS said even if customers wanted to swap NVDA GPUs for AMD’s, they can’t anytime soon, because the supply chain is maxed out (no spare substrate, no incremental AMD capacity); any share shift is a longer-term story and doesn’t justify AMD popping 5% today. Rosenblatt put any benefit at least six months out. William Blair upgraded the stock today.
On AVGO, similar thoughts as above as it could gain custom chip share, particularly through TPUs and take spare TSM capacity. Some called out CLS (TPU exposure) as a beneficiary as well.
On GOOGL, Arun called it “the clearest winner” as TPUs are the main alternative to NVDA and over time TSMC’s CoWoS and N3/N2 capacity should drift toward GOOGL and AVGO. Google is also the only company that both wants to and could fill the gap if neoclouds lose NVDA’s backing.
On ANET, their outlook today covers only scale-out networking. NVDA owns scale-up through NVLink and Spectrum-X. If custom chips take share, a scale-up market opens that isn’t in buy-side numbers for 2027 or 2028. That’s the bull read at least…
ANT/OAI seen as winners as NVDA biggest proponent of U.S. open-source push and regulations likely slow any encroachment of China OSS.
Meme bulls the other big winner
Neoclouds the consensus losers from the news as bears will say they raised money only because Jensen backed them, although push back is that their vendor financing comes from other places like DELL. A potential successor who does more buybacks instead of pre-buys means less neocloud demand. ORCL -1% as their new debt leaned on vendor financing from NVDA. SemiAnalysis calls a non-Jensen led NVDA “really bad for Nvidia supply chain.” For example: MRVL -2.6%, LITE -3.4% as a more conservative NVDA likely slows pace of innovation; recall, NVDA pulled next-gen tech (1.6T/3.2T, CPO) in faster than anyone and pre-bought capacity to do it (LITE’s ‘27 reportedly locked up by NVDA).
AI ecosystem the other perceived loser with the argument being as follows: NVDA throws off ~$50-60B/Q of FCF and puts a big portion back into neoclouds, labs and suppliers, so even a pause could take ~$50B or more out of the system just as rates are rising and parts of credit getting less liquid.
And of course, NVDA the biggest loser in all this as you lose a talent like Jensen which had 60 direct reports which means company likely moves a lot slower and more risk-averse than before. Big change for a company that had been pushing the edge of AI technology across the supply chain. You also potentially lose China/SE Asia revenue (UBS has it at 10%, but others like Culper think higher), potential price cuts mean lower margins, and NVDA could lose out on supply chain relationships that allowed sourcing of cheaper components, particularly memory. Semianalysis had a pretty bearish article on the departure this afternoon. Stock got 6 or 7 downgrades today (or more? we stopped counting after 5).
What to do with the stock?