Can Nvidia survive without Jensen Huang? | The Economist

Nvidia's Rockstar. CEO, Jensen. Huang, has just resigned. over an affair. with a suspected Chinese. agent and allegations. of a second with a direct report. Markets have been. on a roller coaster. hit by the Nvidia news. and before that, by the aftermath of the midterms, but also buoyed by excitement. over next week's anthropic IPO. Meanwhile, a new report. suggests that anthropic models. are improving twice as quickly. as they were last year. What will be the fallout.

from Wang's ousting? How do we square the market. jitters with AI's jaw. dropping pace of development? Will there be an AI market bust? And what would it mean. for the technology. and the global economy if there is? I'm Zanny Minton Beddoes, the economist editor in chief. Welcome to The Insider.

Joining me to. make sense of this mad day. are Henry Kerr, our acting business affairs. editor, and Alex Hearn, AI correspondent here in London, and are put. unseasonably early hours. Still in Palo Alto. is Archie Hall, our acting economics editor. We were just about to start filming. not that long ago. when we heard the news that Jensen. Huang had indeed resigned. So we started again to give you.

the latest possible analysis. So I think what we have to do. really is three things. First of all, what the heck is going on? And you guys can explain to me. what you think. markets will be thinking about. Secondly, I'd like to stand back. a bit though, and really drill down. into a few of the deeper. things that we know. are worrying investors. And then finally, inspired, Henry, by your excellent. cover leader of this week, I want us to ask. if there is indeed. an AI market correction, what will the consequences be? Which is something.

that you looked at this week, but we have to start with. Jensen Huang. Epic news. And I have to say. that our cover designers. were a bit prescient. I just want to show you the cover, which I would note. we sent to the printers last night. Jensen. Huang is falling. out of the bottom of the. two letters. AI and presumably now. tumbling ever further. Henry, you've just had a few minutes. since the news broke. Tell us what's going on. How are markets reacting, and what do you make of it?

Well, the stock was already down. about 8% in pre-market overnight. just on reports that this was. is what was going to happen. Now it's down over 11%, which is pretty astonishing. You know, that's the best part of half $1. trillion wiped out. because of the departure of one man. I think given that what we. what we discovered, this was the likely path, but it wasn't really priced in. until then. Nvidia was only down. about 3%. on Friday's close as of yesterday.

So but now now it really has. a really has plummeted. It's worth emphasising. how unforeseen this was. The prediction markets. had him as a mere 30% chance. to leave before the end of the year, as late as 10:30 p.m. last night, UK time. So less. than less than 24 hours ago. Less than a third chance. Well, actually, it's funny. you say that. because we asked our subscribers. exactly the same. Our poll. this week was should go or not, and I want to bring it up. It's now moot in some sense. He has gone, but it's just interesting. because it shows that exact point.

44% of you, and there were several. thousand of you. who responded, said he should go, and 43% of you said he shouldn't go. So even amongst the erudite. and well-informed. economist correspondent, there was very. corresponding economist subscribers. There was very split views. But let's talk. about what this means, because Archie, Nvidia is not just, you know, a gargantuan company. It is a company at the centre of AI, not just because it produces chips, but because in some ways. it's the sort of central bank of AI.

Can you explain what the. knock on effect could be. for the entire industry? It's exactly that. It's that complicated sense, which Nvidia is both central. to the industry itself. by designing the chips that run it. and then also by financing. So, so much of the industry. that then uses those chips. to kind of produce AI services. And the combination of those things, it's been very successful. really so far. It's been able to. create this kind of vast. demand for its products. and services. And that's run through. Jensen Huang's. personal relationships.

and in many cases, he is a fixture in this industry, has been for a very, very long time. He's involved. in sorting out these deals. and kind of tying them up. And so we now have a dual sense. in which he is. both itself in trouble as a company. I mean that. the share price. declines are staggering. But then also. the figure who is not just central. to Nvidia internally, but also externally. to how it worked with the broader. AI industry, is also on the At. Henry,

The other area Alex, where. I think. there could be. some change, is. sort of geopolitically. and in policy terms, because Jensen Wang. was not only very close. to President Trump, he was an outspoken. advocate of open source models, and he was an outspoken advocate. of selling chips to China, selling his chips to China. In fact, do you think there could be. a sort of. broader consequence in that area? I think it's really possible, and it's one of the reasons. why the wider market. might feel his absence. Huang wasn't. just close to Trump, remember, he was pretty close to XI.

He was one of the few people. in America's. AI industry. who new specific Chinese. policy makers. and could speak to them. He was quite literally. a rock star in China. I was in Chengdu earlier this year. His picture is on the walls. of restaurants that he visited. while wandering around. He is a superstar there, and regardless. of where Nvidia's talent. search takes them, it's incredibly doubtful. that they'll get someone. who can replace. that part of his image. and his importance. So the only direction.

I can see it taking is, you know, yet. more freezing. over of the relationships. between the Chinese. and American AI industries. And do you think I mean, one, one. next question is. because it's not this. Sorry. This has been the absolute news. that has dominated. certainly our attention. in the last few days. But it is not the only big news. out of the. AI industry in the last week. And obviously, another area that got investors. nervous was. what was happening in the midterms. and what that meant. for data centres. But Alex, I want to turn to. something that struck me.

as being underappreciated, which was a slew of news out. about the models capabilities. that has come in the past week to. Yeah. So one of the things. that really sparked. attention and alarm in the. AI industry was a report from meta, this independent evaluation body. that argued that anthropic. with proprietary information. that meta had seen. but wasn't able to share, had experienced. a nearly two times. speed up in the pace of its. development of its models.

compared to. what would have happened. if it wasn't using AI. to develop them to. To simplify that, AI systems are being developed twice. as quickly as they were this time. last year, and the majority of that improvement. is because AI. is now. doing the hard work. that takes us. closer and closer to this idea. of recursive self-improvement, of AI models. developing their own successes, which for a lot of people in the. AI industry. is the sort of break. glass and raise alarm moment, the threshold. at which you cannot. change your future.

And that is happening. fastest in anthropic, which Henry is the company. that plans to do an IPO next week, hotly. anticipated the first of the. of the kind of core model makers, one that has, again. gargantuan numbers. being being bandied around. Tell us what. expectations are for that. and also how. you think this Nvidia news. might affect that. Yes. So the initial numbers people have.