Nvidia's $1 trillion backlog faces scrutiny after CEO's exit

The stock prices of Nvidia's main competitors rose on Thursday, Nov. 12, as investors adjusted their bets on who will supply the chips powering the artificial intelligence industry. The moves followed the resignation of Nvidia CEO Jensen Huang, who stepped down after reports of personal scandals involving a suspected Chinese spy. Huang had led the company for years and served as a public advocate for the sector.

Nvidia, which trades as one of the world's most valuable companies, reported a projected $1 trillion backlog in chip orders by the end of the year. That figure, announced in March, was double the estimate made a year earlier. The company's dominance has allowed it to set the pace for competitors like Advanced Micro Devices, Intel, and Broadcom. These rivals have historically struggled to match Nvidia's release cycle, but their shares advanced as market participants looked for diversification.

Bret Greenstein, chief AI officer at West Monroe, noted that the shift could turn a monopoly into a competitive race. He stated that Nvidia did not create the demand for chips, and a change in market leadership could provide customers with more options. Greenstein suggested this might strengthen the industry by forcing a broader supply chain. Jay Aldebert, chief growth officer of International Services Inc., observed that competitors have long tried to close the gap with Nvidia's graphics processing units.

The departure of Huang also impacts the political landscape surrounding AI regulation. Huang had maintained close ties with the White House and advocated for light-touch rules. Lizzi C. Lee of the Asia Society Policy Institute said his role as a political advocate is now vacant. She noted that Chinese AI firms rely heavily on Nvidia's ecosystem, creating a complex situation for Beijing as it considers tighter export controls on American-made chips.

Investors are closely watching the financial structures that support the AI boom. Nvidia has invested in companies that buy its chips, a practice Aldebert described as incestuous. CoreWeave, a cloud company that rents out Nvidia hardware, saw its stock drop by nearly 7 percent on Thursday. Nvidia holds a nearly 13 percent stake in CoreWeave. Colette Kress, who serves as interim CEO, has overseen these partnership deals.

The resignation occurs against a backdrop of upcoming public offerings and new political leadership. Anthropic, an AI firm, is preparing an initial public offering valued at $1.3 trillion. Meanwhile, new members of Congress who campaigned on aggressive AI regulation are taking office. Chester Spatt, a finance professor at Carnegie Mellon University, predicted that chip buyers will become more reluctant to rely on a single source. The market is now testing whether the demand for AI infrastructure can sustain itself without its most prominent figure.