As investors have pumped trillions of dollars into artificial intelligence companies, chipmakers and data center developers, the economy has come to rely on the industry as its primary \u2014 some would argue only \u2014 reliable driver of growth.<\/p>\n
No company has been more central to that growth than Nvidia, whose chips fill the data centers that power A.I. and whose money helps to finance them. And, at least until this week, it was impossible to imagine Nvidia without Jensen Huang, its high-flying, leather-clad co-founder and chief executive.<\/p>\n
All of which means that Mr. Huang\u2019s resignation on Thursday<\/a>, following a made-for-Hollywood series of scandals, matters not just for the company and its investors, but for virtually every American.<\/p>\n Or, as Aaron Klein, an expert in financial regulation at the Brookings Institution, put it: \u201cCan one C.E.O.\u2019s sex life take down the economy?\u201d<\/p>\n The answer, in a literal sense, is almost certainly no. No one believes that Mr. Huang\u2019s resignation will, by itself, bring the A.I. boom to an end, let alone plunge the economy into a recession. Nvidia\u2019s stock price tumbled on Thursday<\/a>, but the broader market barely budged.<\/p>\n But Mr. Klein\u2019s quip spoke to the unique role that Mr. Huang played at Nvidia, and that his company has played in the A.I. build out.<\/p>\n Nvidia controls about 90 percent of the market for the most advanced chips used to train and run A.I. models. The turmoil at the company could create an opening for competitors such as AMD and Intel to encroach on that market share. But there is little reason to think that Mr. Huang\u2019s resignation will threaten Nvidia\u2019s ability to develop and produce the chips it has promised its customers.<\/p>\n But Nvidia isn\u2019t just the dominant chipmaker. It is also the \u201ccentral bank of A.I.,\u201d helping to finance the industry\u2019s growth through a series of complex deals with its customers and suppliers.<\/p>\n When OpenAI signed a lease for a 10-gigawatt data center in Ohio in August, it was Nvidia that provided $105 billion in loan guarantees. Days later, the company teamed up with several Wall Street firms to create a $500 billion fund to help finance A.I.-related infrastructure. Nvidia owns a more than 10 percent stake in CoreWeave, a big data center operator, and has guaranteed billions of dollars in its loans.<\/p>\n Its loan commitments and financing arrangements would make Nvidia the 10th largest bank in the country, according to an estimate from Ryan Cummings, the chief of staff for the Stanford Institute for Economic Policy Research.<\/p>\n \u201cNvidia is at the center of this circular financing, and obviously at the center of Nvidia is Jensen Huang,\u201d Mr. Cummings said. \u201cHe has been the driving force, pretty inarguably, behind a lot of the A.I. build-out.\u201d<\/p>\n Without Mr. Huang in charge, Nvidia\u2019s role could change, Mr. Cummings said. And while it is possible that other companies will step in to fill the gap, that isn\u2019t guaranteed.<\/p>\n Mr. Huang\u2019s departure comes at a delicate time for the A.I. industry. There have been signs in recent months that investors are growing more skeptical that companies will deliver returns that justify the huge investments they are making in A.I., or at least that those returns could take longer than expected to materialize.<\/p>\n And Democrats\u2019 sweeping victories in last week\u2019s midterm elections could lead to new restrictions<\/a> on data center construction, which could jeopardize the industry\u2019s boom.<\/p>\n \u201cAt a point when people are already on edge about this trade, it\u2019s another piece of uncertainty,\u201d Mr. Cummings said.<\/p>\n In the past, when confidence in the A.I. story has wavered, Mr. Huang and Nvidia have been the ones to calm doubts, reporting huge sales figures or stepping in to provide financing to data center projects whose future seemed in jeopardy. This time, it isn\u2019t clear who will fill the void.<\/p>\n \u201cCould the single largest A.I. company C.E.O.\u2019s impropriety be the start of the pop of the bubble?\u201d Mr. Klein asked. \u201cYes, as crazy as that sounds. Particularly when one company is so central.\u201d<\/p>\n Bubbles are inherently unpredictable: It isn\u2019t clear, ahead of time, what will flip the psychological switch that causes them to burst. The muted market reaction of financial markets to the news on Thursday suggests that investors aren\u2019t losing faith in the A.I. trade.<\/p>\n But Mr. Klein said the Nvidia mess should be a warning that the complex web of A.I. financing arrangements is threatening financial stability.<\/p>\n \u201cIt looks like the financial regulators are sleeping through the alarm clock,\u201d he said.<\/p>\n If Nvidia\u2019s new leadership takes a more cautious approach to financing, that could have implications for the broader economy. The data center boom has helped to prop up the construction and manufacturing industries, at a time when tariffs, high interest rates and uncertainty have limited demand from other sectors.<\/p>\n Still, the breakneck pace of the A.I. build-out has also pushed up inflation and raised borrowing costs. Many economists argue that a modest slowdown would be healthy<\/a>.<\/p>\n