Jensen Huang’s Downfall Is So Much More Than a Sex Scandal

Derek Thompson (0:05)

Today, Jensen Huang.

This is an emergency podcast of sorts. If you're watching, you can see behind me, not our normal studio setup, but rather the window curtains of a lovely hotel because the Jensen Huang news just escalated and escalated and escalated while I was traveling for work. So we are recording this early, early, early on Friday morning to incorporate the latest breaking news in this story where news doesn't stop breaking. The last few days have moved very quickly. First came rumors of a special relationship between Nvidia CEO Jensen Huang and the executive of a Singapore data company, Megaspeed. Singapore data company, by the way, that is widely suspected of smuggling restricted chips into China. Then, that executive might be a Chinese spy, and then confirmation this was a full-blown romantic affair, and then confirmation of another affair with a direct report, and as the accusations mounted, the board of Nvidia met to determine the future of the company and Jensen Huang resigned. As I wrote yesterday in my newsletter, it's hard to imagine a single individual more central to the artificial intelligence age. Huang is the founder and chief executive of the world's largest AI firm, a $4.5 trillion company. At least last I checked, that number is dropping significantly by the hour. Nvidia's sales account for more than 80 percent of the global sales of special chips that power advanced artificial intelligence. But even that packed description of what Nvidia does and what share of global chips it accounts for falls very short of capturing what Huang means to the AI world. With that trademark black leather jacket and his cult devotion, Jensen was known as the Taylor Swift of AI, according to The Economist. In Taiwan, adoration of him is known as Jensenity. His rock star status wasn't some cosmetic quirk, it was financially crucial to the company's growth. Analysts say Nvidia benefited from personal relationships with Taiwanese manufacturers who were eager to work with him, hoping his stardust would rub off on them. Many of Nvidia's counterparties weren't just buying Nvidia chips or its CUDA ecosystem, they were buying into a cult of personality. Jensen in so many ways is irreplaceable at Nvidia and that irreplaceability is engineered by design.

Jensen claims roughly 60 direct reports, 60 which is five to 10 more than the industry average. He once said he doesn't believe in succession planning because he wanted to run Nvidia for another 60 years until he was in his 120s.

It's not shocking that the company lost nearly $1 trillion in value in the last week as it became clear that the Formula 1 car built for one driver was ejecting that driver into the exosphere. There's so many reasons to care about the story beyond the salaciousness of the affair or from a mere position of self-interest. The fact that Nvidia is the first or second largest company in the world, $4.5 trillion, has been responsible for much of the increase in the S&P 500 since 2022 So if you are a normal vanilla stock investor owning the most boring index that just approximates the S&P 500 growth, you are invested directly in Nvidia. Your net worth has absolutely declined by several hundred to tens of thousands of dollars in the last few hours. But beyond the news peg of your and my investment portfolios, this is a massive story about corporate espionage, about geopolitical scheming, about AI policy and the Trump administration's commercial entanglements. To work through it, we have not one but two guests. Jordan Schneider is the co-founder and editor of the newsletter and podcast China Talk, which is absolutely one of the single best sources in all of news for news related to China, and Ben Buchanan, an AI policy official with that administration whose new book, The Bitter Struggle, covers the geopolitics of the AI buildout. We talk about Jensen, Alice Wong, Megaspeed, the relationship between the US government and Nvidia, the debate between the China hawks and those who have been more permissive about selling chips into China. What the biggest story here truly is beyond a sex scandal and so much more.

I'm Derek Thompson.

This episode is brought to you by JPMorgan Chase. In today's unpredictable world, geopolitics isn't just a backdrop. It's shaping markets, business strategy and risk. The JPMorgan Chase Center for Geopolitics brings together former senior policy makers and seasoned practitioners to translate fast moving global events into clear decision ready insights. From conflict and great power competition to energy and supply chain disruption, the center helps clients anticipate what comes next. Read the latest insights at jpmorganchase.com/center for geopolitics.

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