Morningstar Warns: Jensen Huang’s Departure from Nvidia Could Weigh on AI Dealmaking and Financing!

Morningstar said that if Nvidia CEO Jensen Huang leaves the company, his departure could trigger ripple effects across the artificial intelligence industry, weighing on AI dealmaking and financing activity. Nvidia and Huang occupy a central position in the AI ecosystem. His departure could lead to fewer deals and less financing in the AI sector, tighter regulation, and a stronger political backlash against artificial intelligence.

The broader risk to the AI industry stems from Nvidia’s position as a central hub in the global AI sector’s funding, technology, and supply chain networks. Beyond supplying chips to AI companies worldwide, Nvidia has also invested in businesses across the industry’s value chain. Its investments include OpenAI, Anthropic, xAI, CoreWeave, and Nebius. In August this year, Nvidia also signed preliminary agreements with institutions including BlackRock, Blackstone, Brookfield, and Goldman Sachs, with plans to mobilise more than $500 billion in funding over time. Huang previously said Nvidia could support up to a quarter of that amount. This means that a serious leadership crisis at Nvidia could have consequences extending beyond the company itself, potentially affecting numerous businesses that depend on its chips, investments, and financing support.

Despite the uncertainty surrounding Huang’s future, Morningstar maintained its fair value estimate of $310 per share for Nvidia and its four-star rating, indicating that the firm considers the stock undervalued at current levels. Morningstar said demand for AI computing capacity continues to exceed supply and that it does not expect the investigation to affect Nvidia’s revenue in the near or medium term.

On November 8, Huang sent an internal letter to all employees admitting that he had been unfaithful to his wife and apologising to his family, employees, the board, partners, and shareholders. Reports alleged that the woman involved in the affair was an asset of a foreign intelligence agency. Nvidia’s board announced on the same day that it had established a special committee of independent directors, assisted by independent external legal counsel, to investigate whether Huang had been targeted by a foreign intelligence operation. The board said it currently had no reason to believe that national security interests or Nvidia’s core business secrets had been compromised, but that the investigation would examine all available information.

Nvidia’s head of public policy communications made clear that the developments would not slow the company’s progress. Huang will continue serving as CEO and advancing all existing business plans without interruption. He will continue to fulfil all his responsibilities as CEO until the independent investigation reaches its final conclusions.

Market Insight:

Huang has advantages that few other executives can match. Since co-founding Nvidia in 1993, he has led the company’s growth into one of the world’s most important AI chip suppliers. His long record of achievements and the reputation he has built could prove crucial in helping him weather the crisis. However, if the investigation finds that he knowingly disregarded the risks, or that his conduct crossed fundamental boundaries relating to company security and corporate governance, that accumulated trust could quickly erode.