AI trade faces another test! As Nvidia's turmoil continues, Cerebras and Applied Materials earnings are set to take the stage, with clues on chip demand strength becoming a key variable.

In the wake of new cloud provider CoreWeave (CRWV.US) posting strong third-quarter results that boosted investor enthusiasm for the artificial intelligence (AI) trade and drove a rebound in U.S. tech stocks on Wednesday, reports that NVIDIA Corporation (NVDA.US) Chief Executive Officer (CEO) Jensen Huang was revealed to have had a second extramarital affair, along with speculation that he could be removed by the board, have once again weighed on the AI trade and tech stocks. At the same time, however, investors are also closely watching the latest results from Cerebras (CBRS.US) and Applied Materials (AMAT.US), both due after the U.S. market close on Thursday, for fresh clues on chip demand that could revive the AI trade. As of press time, S&P 500 futures were down 0.44%, while Nasdaq 100 futures, dominated by tech stocks, were down 0.92%. NVIDIA Corporation fell nearly 7% in overnight trading. Other chip stocks were mixed. NVIDIA Corporation turmoil continues to escalate! Jensen Huang may be removed Three days after issuing a statement on November 8 acknowledging an extramarital affair, Jensen Huang was revealed to have had a second extramarital relationship, with the woman being an NVIDIA Corporation vice president who reports directly to him. Meanwhile, according to media reports citing people familiar with the matter, the NVIDIA Corporation board is moving quickly to prepare for Huang's removal, with a board meeting as early as November 12 to decide his fate, and has already engaged external executive search firms to find a successor, considering first appointing an interim CEO as a transition. Three days earlier, Huang had just acknowledged in a statement that he had been "unfaithful to his wife" and apologized. At the time, the NVIDIA Corporation board also stressed it was "fully confident in him and his leadership team" and only asked a Wall Street law firm to conduct an independent investigation. Yet in just 72 hours, the investigation escalated into a succession plan. Some commentators believe NVIDIA Corporation may be able to weather the storm, but the process will be extremely difficult, and the likelihood of Huang being removed as chief executive is quite high. Data from prediction market Polymarket shows that the probability of bets on Huang leaving or being removed has surged. Currently, the probability of Huang leaving before November 30, 2026 has risen to 86%, to 91% before December 31, 2026, further to 92% before March 31, 2027, and to 93% before December 31, 2027. With NVIDIA Corporation set to report third-quarter results next week, "key-person risk" is worrying investors. Fiona Cincotta, senior analyst at Gain Capital, said that until the board's investigation findings are released, the related uncertainty may continue to weigh on NVIDIA Corporation's share price, especially with NVIDIA Corporation due to report earnings later this month. Investors turn focus to Cerebras, Applied Materials latest results for fresh clues on chip demand Although NVIDIA Corporation's corporate governance turmoil continues to grip market nerves and sentiment toward the AI trade, investors are still closely watching earnings from key companies in the AI supply chain, including Cerebras, seen as an emerging rival to NVIDIA Corporation, and chipmaking equipment maker Applied Materials. Both companies are due to report results after the U.S. market close on Thursday. Affected by the NVIDIA Corporation turmoil, both stocks fell in overnight trading. Investors hope to find fresh clues on chip industry demand from the latest results of Cerebras and Applied Materials. According to Koyfin data, analysts expect Cerebras' third-quarter revenue to rise 28% year-on-year to US$274.9 million, with an adjusted loss per share of US$0.23; Applied Materials' fiscal fourth-quarter sales are expected to rise 51% year-on-year to US$10.3 billion, with adjusted earnings per share up 87% year-on-year to US$4.05. On the Stocktwits platform, retail investors' sentiment rating on Cerebras shifted from "extremely bearish" to "bearish," while the sentiment rating on Applied Materials rose from "bullish" to "extremely bullish." One user joked: "Cerebras just needs to say 'our CEO didn't have an affair' at the start of the earnings call, and the stock will be back above $200." Another user said: "The NVIDIA Corporation turmoil is a positive for Cerebras. With NVIDIA Corporation taking a hit, I expect the market to rely more on Cerebras' software and chips." For Cerebras' third-quarter results, investors are focused not only on whether third-quarter revenue can meet expectations, but more importantly on whether the company can convert its massive AI computing orders into actual revenue, and whether the margin improvement previously promised can be delivered on schedule. Cerebras previously guided third-quarter core revenue of US$214 million to US$216 million, core gross margin of 38% to 40%, and a core operating margin of negative 25% to negative 23%. Gross margin is particularly noteworthy. Cerebras' second-quarter core gross margin had already fallen to 40.6% from 46.5% in the first quarter, mainly due to the higher operating costs of leased systems. Management previously expected the third quarter to mark the trough in gross margin, with gross margin expected to improve in the fourth quarter as lower-cost, company-owned computing systems gradually come online, with a long-term target of above 60%. Therefore, investors will focus on whether third-quarter gross margin falls within the company's guidance range and whether management can provide a credible path to improvement in the fourth quarter. If gross margin falls short of expectations, or if management cannot confirm a recovery trend in the fourth quarter, the market may re-examine the cost pressures behind the company's rapid expansion. Orders and capacity are also core topics on the earnings call. Cerebras' remaining performance obligations (RPO) reached US$25.4 billion at the end of the second quarter, and management previously said market demand has exceeded the computing supply the company can currently provide, with data center space and the pace of infrastructure deployment being important factors constraining revenue growth. The company also said manufacturing capacity is expected to expand to 10 times the previous level in 2026, and it has more than 600 megawatts of computing capacity in operation or under contract. For investors, a massive order backlog certainly signals strong demand, but more important is whether the company can complete chip production, data center deployment and customer delivery in a timely manner to convert orders into revenue and cash flow. If capacity expansion or data center construction progress falls short of expectations, revenue recognition could still be affected even if order scale remains strong. More importantly, management previously expected the company's 2027 core revenue to exceed three times that of 2026. This growth target is an important basis supporting its long-term valuation. Given that the company is still in a high-investment expansion phase, investors will closely watch whether management reaffirms this target and whether it provides a clearer timetable for capacity expansion, order delivery and profitability improvement. By contrast, Applied Materials' fiscal fourth-quarter results will provide investors with broader clues on the strength of chip capital spending. As one of the world's leading suppliers of semiconductor manufacturing equipment, the company's business covers key wafer fabrication areas such as thin-film deposition, chemical mechanical planarization and inspection, and its orders and performance can reflect chipmakers' willingness to invest in advanced process nodes, memory chips and advanced packaging. Applied Materials previously forecast fiscal fourth-quarter revenue of about US$10.25 billion, plus or minus US$500 million, and non-GAAP earnings per share of US$4.02, plus or minus US$0.20. Because the company had already given relatively strong guidance, the market's focus may not stop at whether fiscal fourth-quarter results meet expectations, but shift to next-quarter guidance and management's outlook for the 2027 semiconductor equipment market. In specific business areas, demand for DRAM and high-bandwidth memory (HBM)-related equipment will be a key indicator for investors, and demand for advanced packaging and advanced-node logic chip equipment is also an important highlight in the earnings report. Margins and cash flow will also affect the market's assessment of Applied Materials' results. As high-value-added advanced process, DRAM and advanced packaging equipment account for a rising share of the business, investors want to see the company maintain its ability to expand gross margin. Applied Materials has previously achieved 13 consecutive quarters of year-on-year gross margin growth and expects advanced packaging and other high-growth businesses to continue improving its product mix. If the company not only achieves revenue and profit growth but also maintains solid gross margin and cash flow performance, it would help reinforce market confidence in the long-term growth prospects of its AI equipment business. It is worth noting that even after Applied Materials previously gave fiscal fourth-quarter guidance above market expectations, its shares still fell more than 5% in after-hours trading, reflecting that investors' expectations for the semiconductor equipment industry are already quite high. Therefore, even if this earnings report delivers revenue and earnings per share above expectations, it may not be enough to drive the stock higher. Next-quarter guidance and the 2027 wafer fabrication equipment market outlook may do more to determine the market reaction than the single-quarter figures. Overall, the two earnings reports from Cerebras and Applied Materials will test the growth logic of the AI supply chain from two different dimensions. Cerebras needs to prove that its AI chips and inference services can build a sustainable business model outside NVIDIA Corporation and convert its massive order backlog into revenue and profit; Applied Materials needs to prove that AI-driven investment in advanced logic, memory chips and advanced packaging is still ongoing, bringing longer-cycle growth opportunities to the semiconductor equipment industry. Against the backdrop of heightened market uncertainty caused by NVIDIA Corporation's corporate governance turmoil, if Cerebras can deliver strong signals on order conversion and margin improvement while Applied Materials remains optimistic about AI-related equipment demand and the 2027 capital spending outlook, it could help ease investors' concerns about the growth prospects of the AI supply chain. Conversely, if Cerebras' capacity delivery and profitability improvement fall short of expectations, or if Applied Materials signals a slowdown in customer capital spending and pressure on order growth, market doubts about AI investment returns and industry valuations could intensify further and, with the NVIDIA Corporation turmoil continuing to play out, drag down the AI sector and tech stocks.