Jensen Huang Scandal Shakes the Entire AI Industry ... Circular Investment Model in Crisis

[Financial News] Concerns are growing that the scandal involving Jensen Huang, CEO of Nvidia, at the center of the artificial intelligence (AI) boom, could shake the entire AI ecosystem, not just the company.
On the 9th (local time), anxiety was spreading in Silicon Valley’s AI industry that, under the so-called “circular trading” arrangements Nvidia has pursued with major AI companies, a crisis at Nvidia could spread to the industry as a whole.
Circular trading refers to a business practice in which Nvidia uses the massive revenues it earns from selling graphics processing units (GPUs) to make huge investments in major AI companies, which then use those funds to buy Nvidia GPUs in turn.
Such circular trading can serve as a catalyst while the AI industry continues to grow, but it also carries the risk of amplifying the fallout if growth stalls or the investments cannot be recouped.
Investors on Wall Street and others both inside and outside Silicon Valley have long viewed such deals with concern, but Jensen Huang has dismissed those concerns.
At a press conference during the annual developer conference “GTC 2026,” held last March, he said, “We fund companies we believe will succeed,” adding, “We can see the business pipeline coming their way, so we know they are going to hit a ‘home run.’”



Indeed, companies such as OpenAI and Anthropic, which Nvidia has invested in, continued to grow steadily despite experiencing ups and downs.
But Nvidia itself appears to be reeling from the scandal over CEO Huang’s alleged affair.
The alleged affair itself concerns Huang’s private life, but it is becoming a problem for the company as a whole because he is in a position to make decisions single-handedly. It has also become a matter of national-level controversy, particularly because the other party is suspected of being a Chinese spy.
Stephen Witt, a writer and former New Yorker reporter who wrote a biography of Huang, said in an interview with U.S. broadcaster CNBC, “It’s hard to know what Nvidia would be worth without Jensen,” adding, “Nvidia is Jensen Huang.”
Others have continued to defend him. Sean Maguire, a partner at venture capital firm Sequoia Capital, wrote on X (formerly Twitter), “He did something unbelievably stupid, and it harmed America,” but added in his defense, “I don’t think there was any malice behind it.”
Maguire said, “Jensen is irreplaceable to America’s AI dominance.”
Gary Black, a partner at Future Fund, meanwhile, questioned whether “Jensen Huang can remain CEO,” and predicted, “With uncertainty over who will succeed Jensen Huang as CEO, many portfolio managers will reduce their holdings over the next few weeks.”



Wall Street tech-stock analyst Dan Ives called the situation “a damaging moment (a black eye moment) for Jensen Huang and Nvidia.” He expects Huang to remain in his position for the time being, but said he could be ousted depending on the results of the investigation.
AFP reported that Huang’s fate is likely to be decided in Washington.
The Democrats, who took control of both chambers of Congress in the recent midterm elections, are expected to press President Donald Trump on why he did not act when he was first informed that Huang had been in contact with Alice Huang, who has been identified as a Chinese spy (Chinese name: Huang Le).
The process is expected to bring an investigation into Huang and continued scrutiny of Nvidia’s business in China.
In the wake of the scandal, Huang has also canceled a series of scheduled official public appearances in the tech industry.
He reversed course on attending a private discussion with an Anthropic executive scheduled for that evening in Montecito, California, and also disappeared from the speaker lineup for a conference in New York hosted by AI voice technology startup ElevenLabs.

[email protected] Lee Seok-woo, International Affairs Correspondent Reporter