Broadcom shares rise as Nvidia CEO resigns, sparking investor optimism
Broadcom stock climbed over 5% after Nvidia announced CEO Jensen Huang's resignation, prompting speculation that the chipmaker could benefit from shifting demand.
Broadcom shares jumped as much as 7.1% on Tuesday, ending the session up 5.4% at $364.36. The rally was triggered by Nvidia's announcement that co-founder and chief executive Jensen Huang had stepped down, with chief financial officer Colette Kress named interim CEO while the board searches for a permanent replacement.
Huang's departure follows allegations that he had an extramarital relationship with a woman the U.S. government claims is a Chinese spy, a claim China denies.
Investors see the leadership turmoil at Nvidia as a potential opening for Broadcom, which designs application-specific integrated circuits (ASICs) that can serve as alternatives to Nvidia's graphics processing units (GPUs) in AI workloads. Some analysts note that Nvidia currently commands over 80% of the GPU market in data centers, and a shift by large customers toward ASICs could boost Broadcom's demand.
Broadcom, trading at about 19 times forward earnings, is viewed by some market watchers as a reasonably priced contender in the AI chip space.