Nvidia, SMCI, Broadcom Slide As Amazon-OpenAI Talks Stoke Fears — Fund Manager Sees Buying Opportunity

The Information reported on Wednesday that Amazon is in talks to invest as much as $10 billion in OpenAI and that a key part of the agreement would be for OpenAI to use Amazon Web Services' (AWS) Trainium chips.

• Investors are seemingly concerned that a large commitment to Amazon's in-house chips could potentially reduce OpenAI's reliance on Broadcom or Nvidia chips.
• Fund manager Ross Gerber opined that publicly traded AI stocks are cheap now following the pullback. 
• A Stocktwits user highlighted that they added more of AI-related stocks Nvidia, Oracle and AMB on Wednesday, while starting a position in Broadcom.

Major AI-related stocks such as Broadcom, Super Micro Computer Inc, Nebius and Nvidia traded in the red on Wednesday after a report that Amazon.com Inc. is reportedly eyeing a $10 billion investment in OpenAI sparked a broader AI-stock sell off.  

The Information reported on Wednesday that Amazon is in talks to invest as much as $10 billion in OpenAI and that a key part of the agreement would be for OpenAI to use Amazon Web Services' (AWS) Trainium chips. The Trainium chips are Amazon's in-house AI chips designed to compete with offerings from Nvidia and Broadcom.

CNBC later reported that the details of the deal are fluid and subject to change but could exceed $10 billion as well.

Investors are, however, seemingly concerned that a large commitment to Amazon's in-house chips could potentially reduce OpenAI's reliance on Broadcom or Nvidia chips, causing a sector-wide pullback. While SMCI and Nebius don't make chips themselves, the former provides critical hardware for chipmakers while the latter provides access to large-scale clusters of high-powered graphics processing units (GPUs) from Nvidia to companies for training and running intensive AI workloads.

While AVGO traded 6% lower at the time of writing, SMCI stock fell 4%. NVDA shares also traded nearly 3% lower.

Expert Chimes In On Dip

“Publicly traded AI stocks are cheap now,” Ross Gerber, President and CEO at Gerber Kawasaki Wealth & Investment Management, said.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around AVGO trended in the ‘extremely bullish’ territory while SMCI drew ‘bullish’ interest.

Sentiment on Nebius is ‘neutral’ and Nvidia sentiment stayed within the ‘bearish’ territory over the past 24 hours.

A Stocktwits user highlighted that they added more of AI-related stocks Nvidia, Oracle and AMB on Wednesday, while starting a position in Broadcom.

Another user expressed disappointment at the lack of a rally closing in on the holidays.  “it’s official now : no santa rally this year,” they wrote.

Despite the sell-off on Wednesday, AVGO has gained 39% this year while Nvidia rose 28%. 

For updates and corrections, email newsroom[at]stocktwits[dot]com<