Is Nvidia's Jensen Huang too big to fail? Why a replacement is difficult and the impact on AI

Most affairs of the heart are kept private. ADVERTISEMENT ADVERTISEMENT But for Nvidia founder Jensen Huang, his secret relationship has become public and that could have a global impact on artificial intelligence, as he is being investigated over his relationship with an alleged Chinese spy and whether he disclosed confidential intellectual property. Nvidia designs the world’s most powerful chips and has become an AI infrastructure company, reaching its arm into robotics as well as autonomous driving. Nvidia has also invested in many AI companies across the world, including in Europe. The chips that it produces run AI systems and have become an important front for the United States’ rivalry with China to lead in technology, with Washington even restricting access to the chips for Beijing. Huang had lobbied for the US to relax its chip export rules to China. "Nvidia is kind of at the base of [the AI ecosystem]," said Carmem Domingues, a former White House Senior AI Advisor to the Biden administration. "All the AI companies either owe money to NVIDIA and/or depend on them to actually run the models and continue developing and growing their businesses," she told Euronews Next. A new leader? As Nvidia’s board reportedly considers ousting him, there are questions over whether the saga could bring about another 2008-style financial crisis and who could replace him. Huang is Nvidia, he created the company three decades ago, his keynotes are attended by packed audiences and he has a celebrity fanbase that follows him wherever he goes. As to who could replace him, Domingues believes "there's not someone who is sort of prepped and ready to go next in line". Despite his two children being part of the company, "it's unclear what exactly their roles are in or how ready they would be to take over", and anyone else in the company seems "unlikely", she said. Even if Huang was removed, they would likely keep him in some kind of role and that would be "in a way quote-unquote enough of a punishment for any potential wrongdoing", she added. Shares in Nvidia fell about 8% in trading on the news that the company board was reportedly considering ousting him. "All the AI companies… have this sort of roundabout funding of each other... So everything is very intertwined and disastrous in many ways. And one falling can bring down a lot," said Domingues. In 2008, global financial services firm Lehman Brothers fell and took the hit, while many other companies were considered too big to fail. "Would they [Nvidia] protect him [Huang] in the name of not letting the 'house of cards' fall down?... So is Jensen, in a way, too big to fail himself? In a way. Yes," said Domingues. But the AI bubble was already showing signs of bursting long before the Huang news and the US midterm election results, which showed a backlash to data centres and AI. "It's almost burst. We're looking at the past month and then the US election and looking at markets. And there are also other problems, other issues. For example, the data centres are struggling with infrastructure, with the power grids," said Sheikha Maytha Bint Maktoum, an investor and founder of mental health company MindFriend. For her, many AI startup valuations are detached from business fundamentals. "No book I have read could have prepared me to see a day where a company is completely built on something that could vanish tomorrow," she said. "There’s a product, but you can copy that product, and that product has no revenue... it is at a loss and valued at $14 billion (€12.6 billion)." But for Nvidia, she believes any financial disruptions to the company would be "temporary", as "Nvidia has for decades built such a strong infrastructure around this ecosystem, it’s very difficult for me to see that would have a long-term impact". Impact on China? The Huang story has mostly been framed in the West as a question of market stability: could trouble at Nvidia ripple through an AI economy built on circular funding? But in China, the conversation tends to run in a different direction. Companies there have spent years trying to reduce reliance on American chips, and episodes like this reinforce the instinct. For Chinese company Xynova, which makes robotic hands, the thinking is more around long-term independence. "Usually Chinese companies want to be more independent, not rely on the supplies... if you have to rely on American companies for supply, then it’s a big bottleneck," Isabel Zhu of Xynova told Euronews Next at the Web Summit tech conference in Lisbon. "Huawei... they are trying to develop the chips, they’re working so hard, and they advocate that they are the Nvidia in China." In her personal opinion, the AI race only makes the country want to push harder. "I have faith in Chinese companies. If you really want to do something, then that will happen," she said. But for Domingues, the Huang investigation will not change anything in the so-called AI race. Long before the Huang saga, she said it was already framed as an AI race, noting that the US AI Action Plan in 2025 is literally called "Winning the AI Race". So, the scandal will not change much. "If you pin the two countries as adversaries, the fact that they would be spying on each other is kind of expected... Every movie about the Cold War is about a spy… I find it unlikely [that it would change the rhetoric]."