Jensen Huang Is Too Big To Fail

Given the obsession over the AI race between the United States and China, you might imagine that news of the man leading the most important company in AI being caught in an extramarital relationship with a woman believed to be a Chinese spy would spark outrage and excoriation without parallel. You could suppose that such reckless behavior, upon discovery, might lead to widespread calls for immediate resignation and for deep investigation—not just of the executive, but the entire company. Pitchforks, et cetera.

It is curious, then, that, as news came out that the Nvidia CEO, Jensen Huang, had had a romantic relationship with a Chinese businesswoman who was also an asset of Beijing’s Ministry of State Security, notable factions of Silicon Valley and Washington, D.C., seemed nonplussed. “Even incredible humans make mistakes,” Bill Ackman, the billionaire hedge-fund manager, posted on X yesterday. “We should all support him and his family. Onward.” The venture capitalist Shaun Maguire offered a five-point analysis of Huang’s situation, noting that the CEO did something “incredibly dumb” and “bad for America,” but that “my guess is there was no bad intention.” He then argued, “I believe Jensen is irreplaceable for America’s AI leadership.” Elon Musk agreed. From there, the posts, written before we know all the facts of the scandal, got only more absurd, including defending Huang’s affair on the grounds that his kids are adults now.

[Read: America can’t afford an AI recession]

Later in the day, Donald Trump echoed calls for Huang to stay on as CEO. He called Huang “an honorable guy.” The president, who has had extramarital affairs of his own and is credibly accused of sexual crimes by numerous women, sounded unbothered. “I think he probably has an excuse for it,” Trump added. Nvidia’s board of directors seemed equally deferential. It announced an independent investigation into the incident but also stressed that it has “no reason to believe that either national security or NVIDIA secrets were compromised” and that it “has confidence in Jensen and his leadership team.” Huang, for his part, issued a statement yesterday acknowledging the affair and noting that he would cooperate with the investigation.

It’s tempting to see this as little more than powerful men defending their kind—a classic example of bros before pressing technological-geopolitical security imperatives. But that explanation misses both Huang’s and Nvidia’s centrality in American politics and the global financial system. Nvidia’s chips are arguably the most important infrastructure component of the AI boom; without the tech, the OpenAIs and Anthropics of the world would be unable to train or power their models—reporting suggests that billionaires have begged Huang for greater allocations of Nvidia chips. This intense demand has made Nvidia a financial juggernaut; in May, its market capitalization was $5.7 trillion, which made it larger than every economy except that of the U.S. and China.

Last year, my colleague Matteo Wong and I described the U.S. as an Nvidia-state, much like Saudi Arabia is a petrostate. That’s because, in recent years, the company has become one of the biggest investors of other AI companies; As of July, Nvidia announced that its equity investments valued roughly $99 billion, including in companies such as OpenAI, Anthropic, SpaceX, and data-center providers like CoreWeave. It’s a circular style of investment where companies pay Nvidia enormous sums of money for its chips and then Nvidia reinvests some of that money back into those companies and their competitors, in part so that they can continue to buy chips. You could make a strong case that Nvidia helps support big chunks of the Magnificent Seven ecosystem, the tech companies that are responsible for roughly a third of the S&P 500’s current value. According to The Economist, Nvidia stock has produced “15 cents of every dollar the American stock market has returned since 2023.”

Huang, who founded Nvidia in 1993, is the company’s key figure, praised by many in the tech industry as one of the visionaries responsible for the rapid acceleration of artificial intelligence. He’s instrumental in the company’s engineering decisions, its allocation of chips, and other investments. He also has no clear successor. Outside of Silicon Valley, Huang has become a trusted adviser and ally to Trump on AI policy. Huang’s thinking on issues such as AI doomerism (he’s anti-doom) and chip allocation in China (he’s for it—a position that warrants examining, given this weekend’s revelations) influences U.S. policy. This centrality is why one tech analyst on CNBC this morning implied that replacing Huang was a comical suggestion. Huang is a singular figure: the linchpin of the company that is arguably the linchpin of the American economy. Framed another way, Nvidia has much of the financial system in a hostage situation. Huang is too big to fail. Which may be why so many people seem motivated to downplay or protect him right now.

How else would one describe the prolific excuse-making for him? The information that has come out around Huang’s involvement with the alleged Chinese spy is alarming. Concerns about the relationship have been mounting for more than a year. Alice Huang (no relation to Jensen) worked for the Singaporean data-center company Megaspeed, an Nvidia client the government had been investigating regarding its potential connections to the Chinese government. As The New York Times reported today, Nvidia intervened in the U.S. Department of Commerce’s investigation of Megaspeed; the probe was subsequently halted and transferred to the Justice Department. According to the Times, Trump was briefed about Huang’s relationship roughly a year ago, including the presumption that Alice may be a spy, and “chose not to do anything with that intelligence.”

In recent weeks, the Nvidia spokesperson John Rizzo and Huang himself both dismissed claims that the relationship with the woman in question was unusual or romantic in any way—we now know this was untrue. It’s still unclear whether Huang disclosed any pertinent corporate or national-security secrets or whether his relationship with an alleged spy had any impact on Nvidia’s opposition to semiconductor export controls in China. But everything we know so far paints Huang, Nvidia, and government officials in a terrible light, at every turn either ignoring or obfuscating a national-security problem.

As more information about the relationship comes out, lawmakers will have to choose whether to take their cues from the markets (Nvidia shares dropped 8.8 percent at one point today—a $400 billion drop in the company’s valuation) or push for more investigation. Trump, who has been reliably motivated in his presidency by the stock market, seems indebted to Nvidia’s performance in the market, as well as to AI investment in general. He’s unlikely to do anything to jeopardize that. Democrats are in a particularly interesting position, fresh off a midterm rout centered on taking a strong stance against tech oligarchs, AI, and data centers and in favor of corporate accountability. Earlier today, Senator Chris Coons said on X that he would push for an investigation into Huang and Nvidia. To press hard on Huang to resign, or to dig deeper into what he and the company knew about the relationship and when, will inevitably risk adding volatility to Nvidia’s share price and, by virtue, the larger Gordian knot of AI investment that is predicated on relentless growth and continued scale. All of this is to say that the moral case regarding Huang is much different from the one that Trump and those with a financial interest in Nvidia’s success will likely consider.

This scandal holds an irony that’s especially befitting of the AI moment. Huang seemingly has cozied up to his industry’s No. 1 foe, China, the boogeyman that, by the professed logic of Silicon Valley’s AI executives, is forcing many of his peers to build a product that they fear. Instead of denouncing him, Washington and Silicon Valley are motivated to circle the wagons around Huang, in part because doing so keeps the system moving and the money flowing. The build at all costs rationale that dictates treating China’s AI prowess as an existential threat is also driving the same people to brush past an egregious dalliance with that enemy.

This is the type of warped incentives that the AI race produces. Playing the game necessitates embracing preposterous risk to justify an idealized future outcome. To run this race requires its participants to withstand intense cognitive dissonance and behave in ways that make them appear ever more inscrutable and reckless to those who are not involved. If nothing else, Huang is a useful example to understand what happens when the fortunes of countries and many of its most powerful citizens are all tied up in one progressively intricate technological and financial bet. In this way, Huang is the AI boom personified, a hyperobject of a man who has wound his way into the center of the economy and whose influence, depending on how you look at it, may usher in either prosperity or untold doom.