Jensen Huang’s downfall threatens to burst AI bubble

Detailed summary

Resignation of Nvidia CEO, whose name has been synonymous with the industry, casts doubt on future of global spending spree

When financial bubbles burst, the temptation is to look for a trigger. Maybe it’s a shift in interest rates, or an accounting scandal that brings down an influential company.

The future of the artificial-intelligence boom is threatened by something altogether different: a chief executive who not only had an alleged affair with at least one employee, but had another with an alleged Chinese spy, too.

Jensen Huang resigned Thursday as CEO of Nvidia Corp. NVDA-Q, the company he founded in 1993 and transformed into the world’s predominant supplier of computer chips to power AI development. He also stepped down from its board of directors, with both exits effective immediately. Chief financial officer Colette Kress will lead the company on an interim basis, Nvidia said on Thursday.

Mr. Huang, 63, is departing amid a scandal at Nvidia, which is worth around US$4-trillion.

The company’s board had opened an independent investigation into whether Mr. Huang was the target of a foreign espionage operation after he disclosed an extramarital affair. U.S. media have reported he had been intimate with Alice Huang, an executive at Singaporean company Megaspeed International. Ms. Huang has been identified as a Chinese spy by U.S. intelligence agencies, according to The New York Times. The U.S. Commerce Department had also been investigating whether Megaspeed was shipping Nvidia chips to China, contravening export controls.

The Times reported on Wednesday that Mr. Huang had yet another affair, this time with Kimberly Powell, Nvidia’s vice-president of health care. And on Thursday, Reuters reported he had a relationship with a second employee.

Mr. Huang has been synonymous with Nvidia and with the AI industry as a whole. His resignation creates uncertainty not only about Nvidia, but about the pace of AI infrastructure spending, which is expected to reach US$7.6-trillion within the next five years, according to an April report from Goldman Sachs.

Some analysts argue that Nvidia has played an…

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