The Jensen Huang Affair (well, affairs) has all the makings of a blockbuster thriller: a trillion-dollar company, foreign espionage, illicit business dealings, and leather jackets. Unlike your standard box office hit, though, it also has the potential to take down the real world economy with it.
In case you missed it, Jensen Huang, husband, father of two, and co-founder and CEO of Nvidia, an AI chip manufacturer and one of the world’s biggest companies, reportedly had an affair with someone believed to be a Chinese spy. (He also reportedly had relationships with at least two direct reports.) The revelation has the U.S. government and the business world looking more closely at Huang’s ties to China and whether he was funneling advanced chips and other trade secrets to help them pull ahead of the U.S. in the AI race.
I’ll leave the rest of the sordid details to the many other outlets covering this story; I’m no national security expert. My first thought upon hearing the news was: It’s going to be a rough few days (or weeks or months) for our retirement accounts.
You see, as the second-largest company in the world by market cap (and sometimes the largest, depending on the day), Nvidia makes up a fairly large percentage of many index funds. In fact, more than a third of the S&P 500’s valuation is held by seven tightly interconnected tech companies, with Nvidia at the center of the web.
Ask anyone even slightly in the know about Nvidia, and they’ll tell you Huang is the company. He held an unusual amount of power, with as many as 60 direct reports and no obvious successor or heir apparent. When news of the first affair broke, plenty of other tech titans made excuses for Huang, saying his actions were no big deal and that the U.S. needs him in his role, otherwise our AI age will be kneecapped before it even fully kicks off.
But as more details emerged about Huang’s alleged wrongdoings, there was no way for him to save face. Under pressure from Nvidia’s board, Huang resigned from the company Thursday. Nvidia shares have been taking a beating since news broke of the initial affair, and it’s only gotten worse since the chip maker axed its figurehead—the company has lost almost $1 trillion in market value this month. And that means if you check your retirement account in the days and weeks to come, you might not like what you see.
While that would be painful enough, Nvidia isn’t just an enormous part of the market and the current U.S. economy—it’s also critical to the entire AI industry, with The New York Times calling it the "central bank of AI.” It has hundreds of billions of dollars in contracts with other AI firms like OpenAI, Anthropic, and Coreweave. There is real worry that without a “visionary” leader like Huang at the helm—and with the uncertainty that comes with the likely investigations into Huang’s activities at the firm—the entire industry will stumble, popping the AI bubble we’ve been hearing about for the past few years.
One man’s indiscretions, in other words, could very possibly tank the stock market and possibly take the U.S. economy with it.
Okay, that’s a little hyperbolic. At this early stage, the best thing most of us can do is nothing, just like with any other stock market dip. Tune into the news if it interests you, but don’t let it dictate what you do with your finances in the next few days or weeks. If you’re bullish on AI, you are, presumably, playing the long game. There’s no need to panic.
In fact, analysts still expect Nvidia to make a profit of over $200 billion this year, according to The New York Times. And FWIW, Yahoo Finance reports retail investors are taking the adage “buy the dip” to heart and are snapping up the tanking Nvidia shares at a record rate.
A bigger issue that Huang’s fall from grace highlights is the risks inherent in the Tech Titan brand of CEO. When a single executive acts more like a monarch, one inextricably linked with a company, you’re asking for trouble—especially when he’s the face of an entire industry that dominates the U.S. economy. Suddenly, millions of peoples’ retirements depend on him remaining in charge.
Even if there wasn’t this scandal, Huang is 63, and he apparently had not teed up the next generation of leadership. ESG might no longer be popular in corporate America, but the lack of good governance—a clear succession plan for a CEO—at one of the most important companies in the world is fairly shocking.
“Whether any individual can replicate Huang’s singular combination of technical vision, ecosystem-building acumen and ability to serve as the global face of the AI revolution remains an open question,” said analysts at RBC Capital Markets.
For now, Colette Kress, Nvidia’s chief financial officer, is stepping in as interim CEO. Just like all of the other women who are put in charge once a man royally screws up, she has quite a mess to clean up.
-Alicia
What else we’re reading (and watching and listening to)
- Here is an interesting look at how Lori and Jensen Huang have their $140 billion fortune structured. -Alicia
- I’m deep in the middle school application process, which means my mom friend text chain has been on fire lately. My friend Shari sent this hilarious New York Times op-ed by Jennifer L. Jennings on the challenges of school choice in the U.S. This line hit especially hard: “What kind of school would be the best fit for your child: STEAM, STEM, project-based learning, International Baccalaureate, performing arts, college preparatory, early college, career and technical education or a school with a website that just says ‘INNOVATION’?” -Lindsey
- My beloved business coach, Stephanie Dolgins, has launched a side hustle selling the designer clothes of her chic friends on Poshmark, and oh my, there’s so much good stuff on there (especially if you wear smaller sizes than I do). Speaking of resale, I took a pile of clothes that Freddy has outgrown and consigned them at Owl Tree Kids on Flatbush last weekend. It was my first time there, and the store is so nice! If you’re in Brooklyn, I highly recommend you check it out! -Lindsey
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- Checking account here, savings account there, a credit card or two on top. Knowing where you stand financially usually means opening each app, waiting for a verification code, and adding up the totals. No wonder we lose track.
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On our radar
- Friend of The Purse Erin Lowry is back with another edition of her Funny Money comedy show this Sunday, November 15, at Caveat in Manhattan. Get $10 off in-person tickets with the code Purse10 or $3 off the livestream with the code Purse3.
- Lindsey is heading to Mexico City next week! Any last minute food recs? (Nothing fancy, LOL!)
Comment of the week
“It is really interesting to see how differently people define class based on their day-to-day lifestyle versus their financial starting point. I grew up lower-middle class and have worked my way to a comfortable SINK income that might look almost upper-middle on paper, though I am still paying off the student loans it took to get here. For me, having college paid for or help with a wedding feels like a big distinction between middle and upper-middle class, simply because starting adult life without debt changes the whole journey.”
-Tarah on “Home Economics No. 64: DINKs living in Charleston, S.C. on $198k combined income”
What else we published on The Purse this week
Are you a super networker? Or does the thought of cultivating work connections make you cringe?
Lindsey Stanberry
In our new personal finance newsletter, Money Notes, Purse contributor Mia Taylor offers advice on how to manage a parent’s finances, hoping to make the road less challenging for others with a loved one impacted by cognitive decline.
Mia Taylor
Lindsey published our first Home Ec from South Carolina, and it’s a fun one!
Lindsey Stanberry
Best money we spent this week
- I had a great time in San Francisco (shoutout to the Purse reader who recommended Cafe Isabella for a breakfast burrito!) and did a little shopping while I was there. I was happy to stumble upon Hobonichi planners IRL (I’ve been wanting one for years!), and I picked up some blood orange and lime olive oil I’m excited to try! -Alicia
- I bought tickets for my dad and I to see Make Work, a new documentary about the New York City Ballet that was edited by my friend Anne Barliant. I love ballet, and I love Anne, and I’m so excited! ($42) -Lindsey
