The Price of Infidelity: 1.9 Trillion

Andreas Cervenka

This is a commentary text. The analysis and viewpoints expressed are those of the author.

Published 18.26

In Silicon Valley, entrepreneurs are worshipped like gods.

But what happens when they mess up?

The infidelity scandal involving the head of Nvidia highlights the risks of placing our future in the hands of a handful of "tech bros."

1.9 trillion kronor—that is how much Nvidia’s market capitalization dropped on Monday. The revelation that CEO and founder Jensen Huang had an affair with a suspected Chinese spy has sent shockwaves through the financial world.

According to President Donald Trump—who is close to Jensen Huang—the FBI is now also investigating the matter. Nvidia has launched its own internal investigation.

The scandal has reached such a scale because Nvidia is no ordinary company. It is arguably the most important company in the world right now. Not only does Nvidia manufacture the highly advanced chips required for AI, but the firm also helps fund other AI companies, with its reach extending into almost every corner of the current boom.

What happens to Nvidia involves vast sums of money, geopolitics, and the race between the world’s two superpowers to become the leader in AI.

And that’s not all: if one heeds the warnings about the potential consequences of AI, the very survival of humanity could be at stake.

That is a lot to rest on the shoulders of one guy in a leather jacket, one might think.

And it is.

The Nvidia scandal exposes the problem with the cult of personality that has become the norm in Silicon Valley. It is hardly surprising that China appears to have identified Jensen Huang as a suitable target for a classic "honey trap." It was likely only a matter of time.

The woman with whom he had an affair—Alice Huang, who is suspected of having been recruited by Chinese intelligence—worked for a Singapore-based company called Megaspeed, a major client of Nvidia. Through this connection, China was allegedly able to obtain chips that are otherwise prohibited from being exported to the U.S. rival. China, for its part, denies everything.

While it is certainly not unique for a middle-aged male executive to have an extramarital affair, doing so with a client—in the most sensitive part of the world, within what is currently the most significant industry—is exceptionally foolish.

Jensen Huang is no ordinary figure. As the founder and CEO of Nvidia since its inception in 1993, he has become synonymous with the company. Both of his children work for the firm, and there are no clear successors. Sixty people report directly to him.

Despite its massive scale—with a market capitalization of 43 trillion kronor—Nvidia is, in effect, something of a one-man show.

In Silicon Valley, this has become the norm. As someone once put it: capitalism is our new religion, the iPhone is our cross, and Steve Jobs is Jesus.

Apple’s legendary CEO helped craft the image of "The Great Entrepreneur."

This has evolved into a cult of personality that has taken root throughout the entire tech world.

Elon Musk, Mark Zuckerberg, Google’s Larry Page and Sergey Brin, Amazon’s Jeff Bezos. 

All of them wield enormous influence over their companies—in several cases, through shares with superior voting rights that make it impossible to oust them.

This Model has been adopted by the subsequent generations of entrepreneurs. At Spotify, the founding duo—Daniel Ek and Martin Lorentzon—maintain a firm grip on power through a specific class of shares.

At the AI ​​company Anthropic—which is eyeing an IPO—the seven founders have secured a structure that grants them control over the company, regardless of what happens.

The rationale behind this model is that the unfettered power of these "geniuses" will ensure continued success.

Yet, this naturally entails a significant risk. What would happen to SpaceX or Tesla if Elon Musk were to somehow disappear? Their share prices would plummet.

It also poses a risk to the world at large. These "tech bros" are more powerful than the vast majority of the world’s heads of state. Above all, they collectively hold power over AI—arguably the most potent technology humanity has ever invented.

Consequently, if—or when—it becomes clear that these "supermen" possess flaws and shortcomings as significant as (or perhaps even greater than) those of anyone else, the situation could quickly become problematic.

Had Jensen Huang been the CEO of a different major American corporation, he would likely have been fired by now. His actions also invite lawsuits from shareholders—a process that has, in fact, already begun.

Unlike some other tech companies, Jensen Huang does not hold controlling voting power at Nvidia, even though he is the largest individual shareholder, with a 3–4 percent stake.

Nevertheless, Nvidia’s dependence on him means the board is likely hesitant to pull the trapdoor.

In a letter sent over the weekend, Jensen Huang apologized to his family and employees, and within the AI ​​world, a lobbying campaign appears to be underway to keep him in his position.

Jensen Huang is vital not only to Nvidia but to the entire industry; he has the ear of Donald Trump and is one of the most influential voices among business leaders who oppose excessive regulation that might slow down the development of AI.

It remains to be seen whether all of this will be enough for him to retain his role.

History shows at least one thing: even those who claim to be the smartest people in the world do not always think with their heads.