Jensen Huang’s resignation from Nvidia following the scandal leaves the company without its visionary leader. It also leaves a major void for the AI industry, where Huang has been the kingmaker in signing deals to support the tech boom.
Under Huang’s leadership, Nvidia became more than just a chipmaker: It secured deals for data centers, invested heavily in AI startups, and even backed companies that bought its products.
Huang has put Nvidia at the heart of AI funding, and the CEO himself has championed some of the industry’s biggest deals. His departure highlights the question of whether the ecosystem he created could break down — and whether it would harm the AI boom that has helped prop up the U.S. stock market and become an engine of economic growth.
“It’s hard to overstate his personal role in all of this,” said Neil Wilson, a strategist at investment bank Saxo.
“Huang was instrumental in Nvidia being the funder of last resort in the AI ecosystem, really supporting a lot of the funding and infrastructure guarantees,” he said.
Nvidia has backed deals, like August’s $105 billion commitment for an OpenAI data center. The company owns a major stake in the CoreWeave neocloud, becoming a major backer and trust booster. Nvidia is expected to take a $10 billion stake in Anthropic’s IPO.
Nvidia makes the graphics processing units that power AI models like OpenAI’s ChatGPT and Anthropic’s Claude. But the company has also been “the central bank of AI,” Jay Goldberg, senior analyst at Seaport Research Partners, told CNN.
The company also functions as a venture capital fund, Goldberg noted, investing in companies to fuel their growth and help them advance in an industry that requires enormous amounts of capital.
“Circular financing” has become a term to describe Nvidia’s financial arrangements because the company supports businesses who, in turn, buy its products. Goldberg said a more accurate term would be “very aggressive vendor financing.”
The company’s financial commitments to the AI boom have increased to the point that it had to address the associated risks in its latest quarterly earnings report.
“Commitments, guarantees and other commercial agreements expose us to financial, counterparty and execution risks and may not provide the expected benefits,” Nvidia said in its latest quarterly earnings report.
Huang’s sudden fall from grace calls this fundraising strategy into question. He resigned following revelations of extramarital affairs and a board investigation into whether he was the target of a “foreign intelligence effort.”
Just three months ago, after committing $105 billion to the OpenAI data center, Huang brought together six major financial institutions – Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR – to agree to treat Nvidia’s AI infrastructure as an asset class on which to raise debt, with the aim of raising more than $500 billion for the AI boom.
“This whole thing was driven by (Huang),” Goldberg said, adding that the deal is not finalized and he expects it to receive further review (and might even fall through).
Nvidia and the neoclouds
Nvidia’s central role in AI funding is directly linked to so-called neoclouds, or companies that lease computers to fuel the boom.
Nvidia, as the leading provider of technology to power AI, has reaped huge profits in recent years. The company has used its cash to invest in neoclouds like CoreWeave and also provide collateral by guaranteeing to step in and generate revenue if it cannot sell all of Nvidia’s GPU computing capacity.
If Nvidia loses its expertise as an AI financier, it muddies the outlook for the neocloud industry, which relies on Nvidia as a foundation to help it issue the guarantees that help companies obtain more affordable interest rates.
In October, when CoreWeave’s bond yields soared, the situation only calmed after Huang stepped in and expressed confidence in the company’s future. “I’m optimistic,” Huang told Bloomberg News on October 15. CoreWeave stock rose 6% that day, ending a three-day decline.
“This just puts more pressure on the ability of some of the smaller neoclouds to raise capital,” Goldberg said.
“When we lose Jensen, we lose a lot of the driving force that drives the industry,” Goldberg said. “So the world seems a little smaller without him.”
Huang’s financing strategy not only supported the growth of the AI boom, but it also ensured Nvidia’s status as the axis on which everything was connected.
Existing long-term deals in the AI sector mean the short-term outlook will likely remain the same, Goldberg said. But over time, Nvidia’s ability to deploy the same creative financing strategies could become less certain and potentially slow the industry’s expansion.
While Nvidia announced Thursday that Colette Kress, the chief financial officer, would serve as interim CEO, potentially reassuring investors, replacing Huang’s trading expertise will be a much bigger challenge.
“He was not only the chief technology architect…but he was also the capital allocator,” Ted Mortonson, technology strategist at Baird, told CNN.
“With him leaving, it leaves a huge void,” Mortonson said.
Nvidia also faces competition for its role as a leading compute provider, with other semiconductor companies like Advanced Micro Devices and Broadcom already building alternatives to the company’s GPUs.
Uncertainty over Nvidia’s role could put pressure on other tech companies, or hyperscalers like Alphabet and Amazon, to step up their efforts as Nvidia, the capital allocator, has been. But it remains to be seen who can champion the industry and cut deals like Huang.
Huang’s dual roles as a man who understood technology and a dealmaker who understood financing was a unique combination that contributed to his star role, Mortonson said.
Huang gave Nvidia the clout and ability to dictate pricing and transaction terms, analysts say. Without Huang, this ability becomes less apparent.
“Jensen’s successor will not have the same latitude or deference to pursue circular deals and pursue aggressive sales tactics,” Mike O’Rourke, chief market strategist at JonesTrading, told CNN in an email.
“There’s the quantifiable and the unquantifiable,” said Michael Monaghan, portfolio manager of the Founders 100 ETF, a fund focused on founder-led companies.
“There are some things you can’t put in a spreadsheet, right? ” said Monaghan. “He’s got that aura, plus all that engineering knowledge, plus the 33 years of building this stuff. You just can’t replace that.”
“Jensen knew where to put his own capital to help grow the ecosystem, and that carries him with him,” Monaghan said.
The demand for AI is robust. Anthropic’s third-quarter revenue soared more than 1,000% year over year, a sign that people are adopting and paying for AI. Companies will likely continue to invest in infrastructure to meet demand. But investors ultimately want to see these investments turn into profits, or may begin to question whether this massive spending is justified.
Huang’s departure shakes the foundations of the sprawling funding network that now defines the AI economy. A slowdown in negotiations could exacerbate cost pressures, cause problems for small businesses, and create additional headwinds that could hamper AI trade.
“The risk lies less in chip demand and more in money,” David Rosenberg, chairman and founder of Rosenberg Research, wrote in a note. “Nvidia’s stakes, guarantees and safety nets are what binds the AI business, so the weakest links are the borrowers who depend on Nvidia’s support.”
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