Key Points
Nvidia CEO Jensen Huang resigned last night, roiling the AI semiconductor industry.
Micron's sales of memory chips depend largely on sales of AI chips from companies like Nvidia.
Well, that was fast.
Just days after the news broke that Nvidia (NASDAQ:NVDA) CEO Jensen Huang was under investigation for an alleged affair with a Chinese spy, and just hours after reports of a second affair, this time with an Nvidia executive, leaked, Huang has now resigned, and Nvidia stock is plummeting.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Shares of the AI chip giant are down 5.9% through 10:15 a.m. ET Thursday, but Nvidia investors aren't the only ones suffering. Micron (NASDAQ:MU) stock is down, too, losing 4.8%.
Image source: Getty Images.
What it means for Micron stock
Why is a leadership crisis at Nvidia impacting Micron stock -- a completely different company that makes completely different computer chips (specifically, DRAM and NAND flash memory chips)?
Basically, the thinking goes like this. Jensen Huang and Nvidia have led the artificial intelligence revolution, inventing the GPU chips that made AI training, AI inference, and AI agents possible, and investing heavily in customers to keep the AI revolution rolling. With Huang out, there's a risk the revolution will derail, and that future developments in this industry won't be as well planned and timed to maintain momentum for AI stocks.
If that's the case, then sales could slow across the industry. Nvidia's sales would suffer, but so would Micron's, because one of Micron's biggest revenue streams is selling to data centers, where Micron memory chips are paired with Nvidia GPUs to enable AI functions.
What's next for Micron stock
Fewer GPU sales means fewer memory sales -- or so the thinking goes. But here's the thing:
While there's a risk this will happen, a risk is not a certainty. Nvidia's stumble might just mean that other AI chip companies -- Intel, Arm, even Google and Amazon are making chips these days -- simply pick up the slack and keep the AI business growing.
With Micron trading below 5x earnings, I think Micron stock is more likely to go up than down over time.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Arm Holdings, Intel, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.