Jensen Huang's influence surpasses that of Nvidia— and that's exactly the problem

Nvidia founder and CEO Jensen Huang is embroiled in a personal-life scandal that is shaking the foundations of the market far beyond just his own company.

Nvidia announced on Sunday that it will launch an internal investigation into Huang’s extramarital affair, involving a female business executive with whom he has a professional relationship. This news has sent ripples through the market, not only putting pressure on the governance structure of the world’s largest chip company with a $4.5 trillion market capitalization, but also casting a shadow over the entire financing ecosystem of the artificial intelligence industry. Nvidia shares fell 6% after hours.

The far-reaching impact of this event lies in the fact that Jensen Huang is by no means an ordinary business leader. He is the driving force behind the large-scale expansion of AI infrastructure; his personal credibility and authority over decisions are deeply embedded in the bullish narrative of the global technology market for the past three years. Now that this narrative is fracturing, investor confidence in AI trades is facing a stern test.

Although Huang’s stake in Nvidia is just 3.4%, he essentially controls all major strategic decisions at the company. According to Bernstein Research, as many as around 60 people report directly to him, with the entire organizational structure highly dependent on his judgment and directives. There is currently no clear successor within the company.

This informal power structure gives Nvidia exceptionally high efficiency under normal circumstances, but once the central figure comes into question, it becomes an obvious point of vulnerability. The outcome of the board’s investigation remains unclear, and uncertainty hangs over Huang’s future and his authority, though the market has already begun pricing in this risk in advance.

In the past three years, Nvidia has not only provided up to $300 billion in financial support for its customers, but also injected billions of dollars into a large number of start-ups, including emerging cloud service providers (neoclouds). Through this massive vendor financing model, Nvidia effectively serves as the financial hub for AI infrastructure expansion.

However, this kind of circular financing structure has also introduced risks to Nvidia’s own creditworthiness. Since the start of this year, the cost of insuring Nvidia’s debt against default has tripled, and corporate bond spreads have widened, reflecting investors’ growing caution regarding exposure to data center-related debt. Now, following the scandal, Nvidia’s deal teams are expected to take a more conservative stance and slow the pace of external financing commitments, dealing a fresh blow to capital-strained neoclouds.

Emerging data center operators such as CoreWeave are currently facing the dual pressures of soaring borrowing costs and tightening financing channels, with a high degree of reliance on Nvidia’s financial support. Reports indicate that Australia’s Firmus Grid, after pulling its much-anticipated Sydney IPO plan, is now in talks with Nvidia regarding subsequent venture capital. Such deals now face the risk of being postponed or even cancelled.

A harsh reality is emerging: over the past few years, the core narrative underpinning the global AI rally has been deeply tied to Jensen Huang’s personal star power. With his charismatic salesmanship, he repeatedly painted the blueprint of the next trillion-dollar industry, fueling widespread optimism about prospects for AI infrastructure.

Now, with the central figure of this narrative suffering reputational damage, the entire logic of AI trades is being shaken. The market is gradually returning from a state of frenzy, re-evaluating with greater caution whether this Nvidia-backed infrastructure boom is sustainable. The shadow of a bear market is quietly looming on the horizon.