AMD shares climb on upgrade as Nvidia weighs ousting Huang

Advanced Micro Devices shares rose Thursday, November 12, after William Blair upgraded the chipmaker. Investors are betting that the company will gain business as rival Nvidia deals with a growing scandal around CEO Jensen Huang. William Blair raised AMD to outperform from market perform and cut Nvidia to market perform. Analyst Sebastien Naji wrote that Nvidia "is facing increased scrutiny and a potential leadership vacuum," CNBC reported.cnbc.com

AMD gained more than 3% in U.S. premarket trading, and Broadcom ↗ 3.99% also rose. Both moves followed reports that Nvidia's board is preparing to oust Huang, according to Bloomberg. Nvidia fell about 9% in after-hours trading Wednesday after The Wall Street Journal News Corp ↗ 0.40% reported the board's plans, SBS reported. The stock stayed under pressure before Thursday's open.bloomberg.com+1

A fast-moving scandal

The crisis grew quickly. On Sunday, November 8, Nvidia's board opened an independent investigation into whether Huang had been "the target of a foreign intelligence effort." Huang also admitted to an extramarital affair that day. On Wednesday, November 11, The New York Times reported that he had a second affair, this one with an executive who reports to him, CNN reported. The board met Wednesday night to decide whether to remove Huang, a source told Reuters. Under Nvidia's bylaws, a majority of directors can remove him "with or without cause." No outcome had been announced Thursday morning, CNBC reported.miamiherald.com+2

The board is working with an outside firm to find possible replacements and is weighing a temporary CEO, Fortune reported, citing Bloomberg. AMD CEO Lisa Su appears on lists of possible successors compiled by the Financial Times and Bloomberg, along with Nvidia CFO Colette Kress, data center chief Ian Buck, and Arm ↗ 12.05% CEO Rene Haas, according to Fortune and The Straits Times. Su is Huang's first cousin once removed. Analysts doubt she would leave a rival that profits from Nvidia's distraction, TechCrunch wrote.fortune.com+2

Rivals look for openings

Beyond Nvidia's troubles, William Blair said delays and supply problems in Intel's ↗ 7.52% Xeon roadmap could also help AMD. Naji pointed to a $220 billion server CPU market expected by 2030, according to CNBC. William Blair's view matches the broader consensus: 48 of 56 analysts rate AMD a buy or strong buy, LSEG data shows.cnbc.com

Investors are betting that uncertainty at Nvidia could push cloud providers to diversify their AI chip suppliers, Investing.com reported. Bernstein cut its Nvidia price target in half, from $400 to $200. Several analysts told CNBC the stock could fall 20% if Huang is removed. Nvidia is scheduled to report quarterly earnings on November 17, and congressional Republicans have asked Huang for a closed-door briefing on November 18, ABC7 reported.abc7chicago.com+2