NVIDIA’s Shakeup Clouds Copper’s AI Boom

Warren Buffett famously said that “there’s never just one cockroach in the kitchen when you start looking around.”

His metaphor apparently extends to extramarital affairs, as Reuters reported a third strike for the former NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang – and a second one with a subordinate.

Since his resignation, shares briefly touched a low of $148.80 per share, marking a peak-to-trough of over 38% since October 6. For a mid-cap company, such volatility would be significant; for one of the world’s largest companies, it is astonishing.

Key-Person Risk and Hyperscaler Capex

“This kind of situation would be damaging at any company but is exacerbated by just how strong the key person risk is perceived to be at NVIDIA,” AJ Bell’s investment director Russ Mould said, according to Mining.com.

NVIDIA’s board is also investigating reports that foreign intelligence targeted Huang, and Washington is expected to look hard at his China chip stance. Both add to the cloud over the company.

Still, a cut to chip orders isn’t a cut to copper demand. Roughly 65% to 75% of what Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) spend goes to servers, processors and networking gear, not buildings.

“Data center investments have grown too large to be funded from company balance sheets alone,” the International Energy Agency warned.

When substations, cooling systems, or nuclear restarts stall, copper and aluminum purchases shift to later years rather than disappearing. Constellation Energy Corporation’s (NASDAQ:CEG) Crane plant restart, targeted for 2027, is one example.

Although it didn’t mention NVIDIA, Goldman Sachs has noted downside risks to its 2027 copper price forecast of $15 400 per metric ton. According to Reuters, the bank now sees $14 600 as a potential average, citing AI-related positioning and lower tariff expectations.

NVIDIA’s Hedge

Despite touting copper as the number 1 solution, Huang took steps earlier this year to shield the company from reliance on the orange metal, which, at 200 Gbps, starts to fade after just 2.5 meters.

“You use optics wherever you must, [and] you use copper wherever you can,” he noted.

Huang invested $500 million in fiber-optic leader Corning Inc. (NYSE:GLW), with up to $3.2 billion through warrants. The money funds three U.S. plants that will raise domestic fiber output by more than 50%. It follows roughly $4 billion NVIDIA put into Coherent Corp. (NYSE:COHR) and Lumentum Holdings Inc. (NASDAQ:LITE).

Copper is still essential for racks and grids. But with uncertainty after Huang’s departure, optics substitution, and political gridlock threatening data centers, the AI metals boom looks far more modest than bulls assumed.

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