Key Points
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Following the resignation of Nvidia’s Jensen Huang, Alphabet was one of a handful of tech stocks to gain on the news.
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The tech giant has been stepping up its chip investments in a bid to win market share from Nvidia.
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On a day where Nvidia rocked the business world by announcing the resignation of Jensen Huang, Alphbaet (NASDAQ:GOOG) (NASDAQ:GOOGL) was bucking the broader trend in the tech sector, finishing the session up 1.8%, while the Nasdaq Composite was down 0.4%.
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Is Nvidia’s pain Google’s gain?
The consequences of Huang’s departure aren’t fully clear, but he was seen as the face of the AI boom and had made Nvidia the dominant AI chip company.
With him out, that could leave an opening for a company like Alphabet, which has aggressively built out its own chips business in recent years.
In fact, earlier this week, the company announced an expansion of its chip lineup in a bid to challenge Nvidia, launching the 8tx and 8i max, specialized versions of its trademark tensor processing units (TPUs) and improvements on the 8t and 8i chips it introduced this spring. The TPU 8tx is optimized for secure and confidential inference, while the 8i Max is designed to overcome the memory wall, or using memory efficiently as compute scales.
With the recent news out on Nvidia, investors seem to be hedging that those chips have greater chance of gaining market share.
What’s next for Alphabet
Chip stocks were mostly down on the Nvidia news, as the chipmaker underpins much for the AI boom. However, there were a handful of winners, including Alphabet. One of them was Broadcom, Alphabet’s design partner for TPUs, which was up 5.5% on the day.
Time will tell if Huang’s exit disrupts Nvidia’s execution, but Alphabet is well-positioned to gain share in a fast-growing market if it does.
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Jeremy Bowman has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.
