Jensen Huang’s Downfall Is a Sign of Silicon Valley’s Power Drain

The inevitability—the invincibility—of Big Tech felt diminished Thursday with Jensen Huang’s ouster from the company he founded and built into the backbone of the AI boom.Jensen HuangAs his power slipped away at Nvidia, the court of tech royalty was being dealt an uncomfortable truth about their new place in the world: Big Tech isn’t so big anymore nor, perhaps, so unbeholden.In the span of a little more than a week, the titans lost their grip on political power in Washington, D.C., followed by one of their biggest stars.Now, being a founder is no longer enough. Silicon Valley is seeing the return of big bureaucracies, institutional powers and old norms that this cohort has spent a lifetime chafing against and some—including, most notably, Elon Musk—bet the Trump administration could dispatch.This rude awakening was evident in the messages of support for Huang that many were putting out late Wednesday ahead of his official resignation announcement, even as more troubling allegations emerged. Some thought Nvidia shareholders should vote on Huang’s future while others advocated for allowing enough time for proper investigations to conclude.“Seems ill advised for Nvidia’s board to oust Jensen Huang given how central his leadership is to the operations of an engine of our future abundance,” Garry Tan, head of startup accelerator Y Combinator, posted on X Wednesday.To some, the response of tech leaders rallying around Huang, who has acknowledged having an affair with a woman suspected of spying for China, was indicative of the cultural rot within tech that has become obsessed with winning at any cost.“Even after more allegations were coming out…the first instinct of these leaders was to circle the wagons and just defend him—that is not a good set of instincts, and it’s not going to work anymore in the new political reality,” said Dex Hunter-Torricke, who once worked for Musk and Mark Zuckerberg. He has since pivoted toward founding the Center for Tomorrow, a nonprofit aimed at helping society prepare for AI.Their defense of Huang is understandable, though. For certain tech leaders, his departure means losing a valuable personal relationship with a man capable of making or breaking their artificial-intelligence ambitions. Such a reshuffling of the deck causes even more uncertainty at a time when a company having computing power provided by Nvidia is the signal to many investors of its relevance and potential.That Huang—who savvily positioned Nvidia at the heart of the AI boom and, in turn, made it one of the most valuable companies in the world—would resign so quickly is a blow to the widely held belief in Silicon Valley of the importance of the modern-day founder.“You’d think we’d have learned from Steve Jobs and Travis Kalanick that one does not just simply replace the founder…” Naval Ravikant, AngelList co-founder, posted on X. To which Musk replied: “True words.”The moment was obviously on the mind of Kalanick, who was ousted from Uber Technologies amid his own scandals. On Monday, he posted his advice on “practical principles to counter a modern-day coup/psyop/struggle session.”A growing chorus of tech voices see Huang’s problems not as his own missteps but as “psyops” fueled by his enemies, either within the government or tech itself or China.“China wants Jensen out, so I want him in,” tweeted Palmer Luckey, the co-founder of Anduril Industries and a veteran of his own corporate battles from his days at Meta Platforms.Shaun Maguire, a partner at Sequoia Capital, posted: “This has nothing to do with money. This is about America winning in AI.”That race dynamic, whether between the U.S. and China or between rival AI labs, has helped fuel incredible amounts of spending on Nvidia chips and investments more broadly.It has also led to uneasy alliances and questionable deals that may well make lots of people rich but could very well lead to pain. Huang’s departure fuels worries that a painful market correction could follow.The power of tech billionaires was also on trial during the midterm elections, where AI data centers were a major campaign issue. For the past two years, the likes of Musk, Huang and the broader AI leadership have flourished under President Trump, who looked to them for advice and attention.After riding a blue wave into power, Democrats are signaling that tech will face greater scrutiny come January.“Despite Jensen Huang’s resignation, Congress must demand answers from Mr. Huang and others at Nvidia about how they may have put U.S. national security at risk,” Sen. Chuck Schumer, who is poised to become Senate majority leader, said on X. “Americans deserve to know that those at the highest levels of power are putting America first, not their bottom line or their personal friendships,” the Democrat added.Still, there are some who have suggested Huang’s days in tech aren’t over. Musk, who has his own chip ambitions, on Wednesday said it “would be an honor” to hire Huang.And others floated that he might return to Nvidia. “Prediction: 3-4 years from now, NVDA will miss a quarter or two, and they will bring Jensen back to run the company,” tweeted Dick Costolo, the former Twitter CEO. “Like fame, everybody is outraged for 15 minutes, and there is nothing Americans love more than the comeback story.”Some in tech might see the biggest takeaway as not that Huang had poor judgment but that he lacked corporate governance that gave him ultimate control. This is what Musk has at SpaceX, Zuckerberg has at Meta and Anthropic’s founders will largely have when it goes public, likely next week.To be sure, the Imperial CEO era remains, but Huang’s demise is a reminder that there are limits to their power.Write to Tim Higgins at tim.higgins@wsj.com