I didn’t panic when, after a single day of post-election ebullience, the stock market saw a sweeping, AI-fueled tech sell-off. I didn’t panic when voters across the midterm elections decided, in 40 of 41 local ballot measures, to restrict data center development. Nor did I panic when Anthropic, which originally said it was gunning for a valuation of more than $2 trillion as it began preparing its initial public offering, later this month downgraded its IPO target by 30%.
But when the news broke that Nvidia had launched an independent investigation into its CEO, founder, emperor, and god-king Jensen Huang after he confessed to having an extramarital affair with a woman accused of being a Chinese spy? Yes, I panicked. And despite President Donald Trump offering the most sympathetic possible defense that Huang “had absolutely no idea that the person in question was a spy,” the national security and corruption implications for Nvidia could very well jeopardize America’s entire AI-fueled economic revolution.
The heart of the crisis is not that Huang, who resigned on Thursday, cheated on his loyal wife of 41 years. It is not even that Jensen Huang slept with Alice Huang, the ostensible Chinese spy with whom he has no relation (thank the Lord). Rather, while Jensen Huang was sleeping with Alice Huang, a Chinese citizen who was then an executive of the Singaporean data center company Megaspeed, Jensen Huang was actively lobbying the Trump administration to relax export controls to China. Now, in light of a second allegation that the Nvidia boss was having another affair with a subordinate at the company, Nvidia’s board reportedly met to deliberate over whether to oust him. That’s a previously unthinkable proposition, since Huang idiosyncratically oversees dozens of direct reports daily rather than delegating them down the company hierarchy.
The crisis at Nvidia is no mere sex scandal. It’s an existential threat to both Nvidia, which accounts for 7% of the S&P 500’s market cap and drove 15.5% of the index’s growth last year, and the industry as a whole. Because they hate wealth as much as they hate anything that Trump champions, Democrats and degrowthers have been chomping at the bit to crack down on AI and specifically the Magnificent Seven bosses who have cozied up to this administration.
Now that the single largest champion of a deregulated and open-source vision for the AI boom may have been compromised by a Chinese spy, the Dems and degrowthers will say that such power is so concentrated in the hands of corrupt men that it would be a national security threat not to enact more federal oversight. And the grotesque, stomach-churning part of all of this is that there will be a grain of truth to this, in no small part due to the complicity of Trump’s own Cabinet.
Late last year, Tiana’s Take detailed Trump’s injudicious acquiescence to Jensen Huang’s request that Nvidia be allowed to legally sell its powerful H200 chips to select Chinese buyers, a move that very well may have been fueled by pillow talk from Alice Huang. But not long after, Trump began to authorize a crackdown on illegal diversions of American chips, primarily from Nvidia, to Beijing.
In May, Secretary of State Marco Rubio sent Trump and top Cabinet members a classified memorandum detailing the relationship between the Huangs and the intelligence indicating that Alice Huang was a Chinese spy. The White House directed the Commerce Department to put Huang’s Megaspeed on the entity list of companies that pose national security concerns.
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Commerce Secretary Howard Lutnick refused this request in May. He refused a second attempted crackdown order from Trump in August, and on Nov. 5, Lutnick reportedly stonewalled Trump again.
Absent the AI boom and the hyperscaler buildout, the U.S. economy would be in a technical recession. The productivity gains from the sector are the only counterbalance to a labor force shrinking from aging, retiring, and mass deportations, and our robust, AI-fueled economic growth continuing to outpace the interest rate on our $40 trillion national debt is the only reason we aren’t collapsing into a full-scale debt crisis that’s currently imperiling the fate of the French Republic. Now, Huang just handed the Democrats the excuse they’ve been salivating for to crack down on the entire industry.
Tiana Lowe Doescher (@TianaTheFirst) is an economics columnist for the Washington Examiner.
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[ H/T Washington Examiner ]
