Jensen Huang resigned as CEO of NVIDIA after reports of an affair with a Megaspeed executive whom the U.S. government suspects of spying for China.
NVIDIA Faces Leadership Crisis
The sudden departure ends Huang’s 33-year tenure at the chip giant. Stephanie Balaouras, Vice President and Group Research Director at Forrester, told Fortune that “NVIDIA’s leadership crisis is a stress test for the AI boom.”
An early-stage venture capitalist told Fortune that “Obviously, NVIDIA is more than just Jensen Huang, but he has indeed driven the entire investment landscape.”
The investor said: “Now there’s a question of whether the pace of AI investment and the scale of capital flowing into these companies can continue.” He added that “it’s already become quite extreme.”
Funding Flows Face Uncertain Future
NVIDIA has operated as the central bank of the industry by funding dozens of companies.
A venture capital partner told Fortune that the “NVIDIA funding train” supporting parts of the market may be ending.
The partner said: “It’s unlikely that they can continue to count on NVIDIA for future financing.”
Seaport Research Partners analyst Jay Goldberg said smaller neo-cloud companies that buy NVIDIA chips in bulk depend on Huang’s backing.
CoreWeave shares fell 7.5% on Thursday. Nebius Group dropped 18% after issuing quarterly earnings guidance below expectations.
Governance Challenges Follow Departure
Goldberg said the data center industry will be more vulnerable to political pressure without Huang.
Lawmakers now hold stronger influence. They advocate for stricter regulation of artificial intelligence technologies.
Tony Ball spoke about the policy implications.
What happened at NVIDIA must be addressed by NVIDIA itself. But when it comes to how AI continues to create value for organizations and productivity, this is an inevitable structural challenge—and a governance and policy issue that the world will eventually need to confront head-on.
Tony Ball, CEO of digital security company Entrust
Will regulators approve the Hugging Face acquisition, and how will NVIDIA fund startups without Huang?
Earlier coverage: Jensen Huang Agrees to Testify, Lawmakers Say