AMD, Broadcom rally as Nvidia board probes Huang

Shares of Advanced Micro Devices ↗ 2.70% and Broadcom ↗ 2.38% jumped on Monday, November 9, while Nvidia ↘ 5.70% fell after its board opened an independent investigation into CEO Jensen Huang's relationship with a woman U.S. intelligence officials suspect of spying for China. The rally gave Nvidia's rivals a lift, but analysts say the scandal could also bring more scrutiny of how every U.S. chipmaker sells into China.

At the close, AMD was up 13.3% and Broadcom 8.8%, according to MarketWatch's News Corp ↘ 0.89% updated report. It was Broadcom's best day since it announced a large deal with Alphabet ↘ 0.21% last November. Nvidia fell more than 4% and lost about $192 billion in market value. AMD also got help from an Oppenheimer upgrade and a new Google Cloud collaboration, Yahoo Finance reported. The S&P 500 ↘ 0.84% and Nasdaq Composite gained more than 2% each.finance.yahoo.com+1

The board's inquiry

In a statement on Sunday, Nvidia's board said a committee of independent directors, working with outside counsel, would lead the review. It said that "while the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board's inquiry will examine all available information," Yahoo Finance reported. Huang admitted to an extramarital affair in an email to staff. The woman, Alice Huang, is a former executive at Megaspeed, a Singapore-based Nvidia customer that is under U.S. investigation over claims it helped Chinese firms get around export controls, MarketWatch reported. China has denied any spying scheme, the New York Post reported. Three House Republican committee chairs have requested a closed-door briefing on November 18, according to Yahoo Finance.marketwatch.com+3

Rivals face scrutiny too

Analysts warned that Nvidia's rivals may not be spared. Seaport Research analyst Jay Goldberg told MarketWatch that companies like AMD and Broadcom will likely "start adding honeypot training," and that "every company is at risk of this." Morningstar ↘ 1.02% analyst Brian Colello said all U.S. AI suppliers will face more scrutiny in the coming months. He added that "Nvidia's market dominance gives it the biggest bullseye."marketwatch.com

The fallout could also speed up new limits on exports. Raymond James ↗ 0.21% analyst Ed Mills pointed to the bipartisan MATCH Act and said export restrictions are a "top priority" for Democrats, who won majorities in both chambers of Congress last week, MarketWatch reported. Both Nvidia and AMD sell some older chips in China, including AMD's MI308. Broadcom and Nvidia also sell high-end switches used in Chinese data centers.marketwatch.com

Nvidia is set to report earnings on November 17, where it will likely face questions about the investigation, Yahoo Finance noted. For now, Panmure Liberum's Joachim Klement told CNBC that the impact is contained to Nvidia, Stocktitan reported.finance.yahoo.com+1