As Nvidia reels from Huang’s affairs, who stands to gain?

Nvidia‘s leadership crisis is creating an opening for its biggest rivals as well as partners, as investors bet that Jensen Huang’s departure could loosen the AI chip giant’s grip on an industry it has long dominated.

From AMD to Broadcom and even partner TSMC, chipmakers are emerging as potential beneficiaries of the upheaval, with market watchers pointing to a possible redistribution of manufacturing capacity and a narrowing of Nvidia’s technological lead.  

“What you’re seeing in markets now is a bit of a rotation into other advanced chip design companies, on the assumption that this will enable other companies effectively to catch up,” said Mark Franklin, head of multi-asset solutions for Asia at Manulife Investment Management.

That shift comes as Nvidia grapples with the fallout from Huang’s resignation, following revelations about his multiple affairs including with a woman believed by the U.S. intelligence community to be a Chinese spy.

Huang’s departure could give competitors an opportunity to close the gap as Nvidia navigates leadership uncertainty, Franklin highlighted, adding that the rotation was already helping fuel positive momentum in other semiconductor stocks.

Farzin Azam, managing director of equities trading at Mizuho Americas, said the shift was evident on trading desks, with investors moving toward chipmakers less exposed to Nvidia’s management turmoil.

“Names such as TSMC, names such as Broadcom, names such as Advanced Micro will come as winners of this because they don’t have this overhang of a management disruption,” Azam told CNBC.

Nvidia shares have plunged 11% so far this week, while rivals AMD and Broadcom have gained 30% and 24%, respectively.

TSMC, which manufactures Nvidia’s most advanced processors, has also rallied 11% over the same period, as it stands to benefit, irrespective of which chip designer gains or loses. A rotation away from AI names perceived as risky also positions TSMC as a relatively safer play for those bullish on the overall theme.

The rotation away from Nvidia has also extended into less speculative corners of the semiconductor industry, including analog chipmakers such as Texas Instruments, Analog Devices and Infineon, as investors adopt a more defensive stance, he said.

Texas Instruments has climbed about 13% this week, while Analog Devices and Germany’s Infineon have advanced 12% and 14%, respectively.