It's one thing for money to shift between stocks, but it's another thing for customers to shift their supplier relationships
Since Friday's close, Advanced Micro Devices has gained $101.47 billion in market cap value.
Advanced Micro Devices shares have given back most of their Tuesday gains as investors assess just how much the company stands to benefit from Nvidia's struggles.
Shares of AMD (AMD) were up 6% at their highest point on Tuesday, which meant the company had gained $148 billion in market capitalization in the two days since news broke this weekend of Nvidia (NVDA) CEO Jensen Huang admitting to an affair with an alleged Chinese foreign-intelligence asset.
But the stock has since pared gains and was up 0.7% in midday action, bringing the two-day market-cap gain to $103 billion.
See also: The AI trade is now counting on Anthropic's IPO - but it couldn't be happening at a worse time
The Nvidia board's probe into Huang's relationship has given investors reason to shift their positioning within the chip sector, David Wagner, a portfolio manager at Aptus Capital Advisors, told MarketWatch.
"AMD is the most direct alternative in data-center accelerators," Wagner said, referring to advanced hardware components for artificial-intelligence workloads. Investors are "diversifying AI exposure away from a single dominant name," referring to Nvidia. "AMD is the first stop," he added.
However, Afsheen Afshar, the founder of investment firm Pilot Wave Holdings, told MarketWatch that he would be "careful about treating every dollar moving into AMD as simply a dollar moving out of Nvidia."
"When customers are this dependent on one supplier, any disruption around that supplier creates an incentive to reassess alternatives, even if those alternatives are not perfect substitutes," he said, referring to AMD as a substitute for Nvidia as a supplier of semiconductors.
Yet there's a difference between AMD benefiting from "Nvidia-specific uncertainty" and gaining market share in a "durable" way.
"The first can happen quickly in the stock market. The second requires customers to make long-term architecture and procurement decisions around AMD," he explained.
Chip stocks also have a tendency to swing on developments related to Anthropic, and Tuesday brought the news that the AI lab is seeking a valuation lower than what it was once reportedly targeting but higher than what had been feared in recent weeks. The company is seeking a target valuation of $1.3 trillion to $1.4 trillion based on various implied diluted share counts.
The news comes as a positive surprise, Wedbush analyst Matt Bryson told MarketWatch, as some investors were expecting a valuation of closer to $1 trillion.
-Hannah Pedone
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