More Bad News for NVIDIA. With Board Planning to Boot Jensen Huang, Sam Altman Reveals Master Plan to Stop Buying Their Chips
Yahoo! Finance ·
Key points
- News reports allege Nvidia's board is preparing to remove CEO Jensen Huang following a Times article about his relationship with Nvidia executive Kimberly Powell, contributing to a volatility spike in Nvidia's stock.
- OpenAI CEO Sam Altman told Samsung company presidents that OpenAI’s edge lies in owning a vertically integrated stack, enabling high-volume AI sales at thin margins by lowering per-unit costs through in-house design and control of chips.
- OpenAI’s 2025-2026 deals relocate computing away from Nvidia toward AMD and Broadcom, with deployment of 6 gigawatts from AMD and a 10-gigawatt Broadcom pathway, signaling a move to diversify suppliers and move processing in-house.
- Altman asserted there has been double-counting of AI demand and indicated only OpenAI and Anthropic are driving major growth, which heightens bargaining power for large buyers and raises questions about Nvidia’s future pricing and margin trajectory.
- For Nvidia holders, the stock reaction reflects a potential erosion of pricing power and a longer-term challenge to sustain high gross margins if key customers consolidate their own computing capabilities, though near-term demand remains supported by an ongoing chip-supply crunch.
- Strategic implications center on portfolio concentration risk; for investors with sizable Nvidia exposure (around 10% of a retirement portfolio or more), the dual pressures from leadership uncertainty and OpenAI’s vertical integration plan are particularly salient, influencing potential trim decisions.
- The article emphasizes monitoring Nvidia’s gross margin in upcoming quarterly reports as a bellwether for the company’s resilience in a shifting AI compute landscape.
Summary
A surge of negative developments for Nvidia unfolds as reports claim its board may oust CEO Jensen Huang amid a related personal controversy, while OpenAI’s Sam Altman outlines a strategy to reduce reliance on Nvidia by building a vertically integrated AI infrastructure with partners like AMD and Broadcom. OpenAI’s moves, framed as driving down costs and enabling high-volume, thin-margin AI sales, suggest a shift away from single-provider dependence and tighter control of hardware. The combined fallout risks weakening Nvidia’s pricing power and gross margins if major customers pursue in-house or alternative suppliers. Investors face growing questions about Nvidia’s leadership, competitive dynamics, and the durability of its core business model, with a path forward hinging on how the company adapts to evolving supply chains and customer concentration.
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