Jensen Huang’s Fall Is a Dark Consequence of What’s Happening in Silicon Valley

AdvertisementSKIP ADVERTISEMENTGuest EssayNov. 14, 2026, 7:00 a.m. ETCredit...Illustration by The New York TimesAmit Seru and David LarckerDr. Seru is a finance professor at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution. Dr. Larcker is an accounting professor emeritus at the Stanford Graduate School of Business.It is easy to attribute Jensen Huang’s abrupt fall to his lapses in judgment — including his growing list of extramarital dalliances — but Nvidia’s woes are a symptom of a much bigger problem.Silicon Valley finds itself increasingly under the control of a handful of dominant chieftains and investors. And as these extraordinarily powerful executives grow closer to President Trump, the dark consequences of the wheeling and dealing are coming to the fore.These problems are serious, but they are hardly new. Through much of this country’s history, particularly in the early 1900s, many American companies operated under similar conditions, dominated by powerful chief executives and controlling shareholders who faced few checks on their behavior. Over time, scandals, crisis and economic strain compelled regulators and public shareholders to demand more rigorous safeguards to protect the economic interests of everyday investors. This pressure led to many of the rules we take for granted today. Publicly traded companies must have an independent board of directors to hold executives accountable; they must disclose their operations clearly and in full; shareholders have rights. Such rules didn’t end all crises, but they made corporations well equipped to deal with them.In the past decade and a half, the rules began to weaken, as several presidential administrations relaxed corporate regulations. Some of the changes occurred for good reasons: to reduce the cost for a company to take itself public, to encourage innovation, and to ease costly compliance and reporting requirements. Other changes derived from less defensible motives, such as an increased tolerance among investors, boards and regulators for concentrated founder control.Few industries have taken this shift further than Silicon Valley. You can see the seeds of the problem in the many origin stories of its most successful companies: a brilliant founder, toiling perhaps in his garage, possessed with a singular vision and focus. Over time, even investors came to regard successful founders as something akin to mystical geniuses who could not be replaced. If a company loses its founder, it is lost forever. In such a mind-set, board members and shareholders give leaders pretty much whatever they want. The gushers of money flooding the biggest companies keep investors satiated, further entrenching this practice.That explains why some of Silicon Valley’s largest companies are basically authoritarian realms. Mark Zuckerberg, the chief executive of Meta, is one of many successful founders who were granted a special class of stock that gives them effective control over their companies’ futures; the founders of Anthropic have proposed a similar arrangement ahead of their initial public offering, giving them collectively a majority of voting power, though they would own a much smaller share of the company. Elon Musk, the chief executive of Tesla and SpaceX, has a similar arrangement.Mr. Huang lacked the special shares that would have made him impossible to fire. Instead, he entrenched himself in the company by overseeing seemingly every aspect of its operations. Nvidia dominates the manufacture of cutting-edge chips needed for artificial intelligence development, making the company critical to the success of the American A.I. industry (and also a highly desired target of foreign powers, China in particular). Yet Mr. Huang ran the $4 trillion company almost like a family business, rather than as a public company accountable to millions of shareholders. Ignoring traditional management structures, he had about 60 executives report directly to him. He never identified a successor. Both of Mr. Huang’s children, who are in their 30s, were swiftly rising through the ranks, with reports that they were being groomed as his heirs apparent.Then Mr. Trump returned to power. Silicon Valley’s elite almost immediately began making nice with the president, a logical move given his lengthy history of favoring his friends (and persecuting his perceived enemies). Mr. Huang seemed to develop a particularly close relationship with Mr. Trump — a useful connection given that the Commerce Department had restricted sales of Nvidia’s most cutting-edge chips to China in 2022. Mr. Huang repeatedly pressed Mr. Trump to ease the restrictions, and, over time, his wishes seemed to come true. A Commerce Department inquiry investigating whether the Singaporean company Megaspeed was diverting Nvidia chips to China was abruptly halted by the administration and transferred to the Justice Department.Many have pointed to Mr. Huang’s dalliances as the catalyst for the crisis. But look carefully, and you can see that the administration must shoulder some of the blame. Had it enforced the export restrictions, concerns at Megaspeed could have been addressed sooner, and China would not have been so incentivized to ensnare Nvidia’s charismatic chief executive. (China has rejected the espionage claims.)The fallout has been messy. Not only must Nvidia find a permanent leader, but it must do so while facing serious questions about its dealings with Megaspeed, its possible violations of export controls and the consequent damage to American technology. Recent news that the company suddenly elected to change how it reported revenue from Singapore last year — revenues that at last reporting had ballooned to 22 percent of total revenue — is sure to raise questions.Nvidia’s board has just announced an interim chief executive and appointed a chair of the board (Mr. Huang had been functionally filling the post), but neither helps address the deeper problem, the nature of which places the company in uncharted territory. There is no standard playbook for managing a leadership transition while investigating allegations involving national security and answering to federal regulators and public shareholders.Good corporate governance demands thinking about such scenarios and having plans in case crises of various kinds emerge. But in the case of Nvidia (and Tesla and Meta), financial success has made investors more willing to see past the risks of relying so heavily on one person, instead of demanding a clear and credible succession plan.Just as these tech companies are becoming central to the fortunes of millions of American households, we have become willing to tolerate weak governance practices that put immense power in the hands of a few individuals.Not every old rule needs to return, but we should revisit the safeguards essential for public ownership and why they were originally introduced. Boards should have the authority and willingness to challenge management. This will require concerted effort from regulators, corporate boards and shareholders to protect the millions of Americans invested in publicly traded technology companies. Institutional investors who invest retirement money could demand that these companies up their governance game.The American stock market has been the engine of the country’s growth and a center of attention and envy for the rest of the world — thanks, in part, to our robust corporate governance structure. Remarkably, at a time when a handful of technology companies are powering both the market and our economic growth, we risk forgetting that lesson.Amit Seru is a finance professor at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution. David Larcker is an accounting professor emeritus at the Stanford Graduate School of Business.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow the New York Times Opinion section on Facebook, Instagram, TikTok, Bluesky, WhatsApp and Threads.A version of this article appears in print on , Section A, Page 22 of the New York edition with the headline: Nvidia’s Woes Are Only the Tip of the Iceberg. Order Reprints | Today’s Paper | SubscribeRelated ContentAdvertisementSKIP ADVERTISEMENT