Nvidia Prepares to Oust Jensen Huang: What a Second Affair Means for the AI Economy

Nvidia's board is reportedly preparing to oust Jensen Huang after The New York Times reported a second affair, this time with an Nvidia executive who reported to him, on top of his alleged relationship with a suspected Chinese spy. Ejaaz walks through the evidence, from the halted Commerce probe to the $7.5 billion in chips that reached China through a network of fronts, asks who could replace him, and why the real story is what an Nvidia without Jensen means for the entire AI economy.

We also cover Anthropic's IPO roadshow and what may become the largest raise ever, CoreWeave's earnings and the case for older GPUs, what AI data centers are paying their local communities, Google's Gemini Carbon and two new TPUs, and Meta's cheapest model yet.

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Timestamps
00:00 Jensen Huang's Worst Week
00:43 The Damning Evidence
02:12 From Denny's to the Top
03:06 The Second Affair
04:23 Who Replaces Jensen?
05:35 $7.5 Billion in Chips
06:21 Did He Know?
07:33 The Dwarkesh Debate
08:27 The AI Economy Runs on Jensen
09:33 What Happens Next
10:08 The Labs Look Elsewhere
11:18 Anthropic's IPO Roadshow
14:30 A Record $100 Billion Raise
15:28 Anthropic's Bold Claims
17:39 CoreWeave Proves the Bears Wrong
19:52 Data Centers Pay Their Way
21:35 Gemini Carbon and Two New TPUs
23:10 Meta's Cheapest Model
24:15 Final Thoughts

#nvidia #jensenhuang #anthropic #ai #coreweave

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Ejaaz Ahamadeen

What is In the Loop AI?

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Well, that's a nail in the coffin for Jensen Huang. Game over.

The CEO of NVIDIA was caught having another affair with an executive that directly reports to him.

And this time he was caught on camera on video by someone filming nearby.

The allegations now are he had an affair with a Chinese spy,

allegedly, and now with an executive on the brink of being ousted now by his board.

It's going to be decided over the next 24 hours. This is easily the worst week,

I would say, of Nvidia's and Jensen Huang's life.

And it's shedded now around $2 trillion, maybe just over $2 trillion worth of

Nvidia's market cap. Now, I wish that was the only additional news when it comes

to the Jensen spy scandal.

But there's more, unfortunately. One, about a year ago, when the investigation

started into his alleged affair with the Chinese spy.

One of his legal counsel reached out to the governing authority that was leading

the investigation to push back and say, hey, you need to stop this,

effectively having interference in the investigation.

And third and final bit of damning evidence is that the initial damage was expected

to be around $2 billion sold to China worth of chips.

It ended up being a lot higher, almost three times, or just over three times,

at $7.5 billion, which happened to be more chips than he had sold to Elon Musk,

one of the biggest advocates in America.

So all the statements and claims that Jensen Huang had made at the time where

he wanted America to stay number one and stay ahead of China ended up actually

not being put into practicality when it came to selling chips.

He was selling more to China. So all of this to say, this puts NVIDIA one of the, if not the.

Biggest company in the AI economy, which effectively is the rest of the economy

because the majority of the stock market relies on all the AI investment that

is happening right now in jeopardy.

And it looks like Jensen Huang will be ousted at the time of recording.

And this is literally breaking news. The news broke about an hour ago.

The Wall Street Journal is reporting that

The board is currently deciding to oust him as early as tomorrow morning.

So by the time you're watching it, it might have already happened.

In fact, I already tried to record this episode about three hours ago,

and then the news of this broke, and I had to add it in. And I won't lie, this is a sad day for AI.

Jensen Huang has, for all intents and purposes, lived the American dream when

he birthed the idea of NVIDIA over three decades ago in a Denny's,

which is a fast, casual restaurant that serves pancakes. He was a dishwasher

there. If you literally looked at his LinkedIn, that was the case.

And he worked up on this idea to create NVIDIA into the most valuable company in the world.

And the stock is down over 30 to 40%. So today I wanna unpack all the recent

evidence that is pretty damning for Jensen's position,

what this means for NVIDIA, who's likely to succeed him and what this means

for the rest of the AI economy and how it's gonna play out over the next six,

12 months because a lot of CapEx, a lot of investments, a lot of Anthropics

revenues, upcoming IPOs, OpenAI, the same,

relies on this one singular company, on this one singular individual.

What is NVIDIA worth without Jensen Huang? We're going to get into all of this

and more on today's roundup brought to you by Qualcomm.

Okay, so the New York Times, who originally, I believe, were the ones that broke

the story of him having his first affair with an alleged Chinese spy,

Alice Huang, were also the ones that just broke their story about his second affair.

And this time, it's with an NVIDIA executive that's been at the company for a while.

At this point, I think just over a decade, used to be the executive or senior

head of business development and then got promoted to report directly to Jensen

to be the VP of healthcare. Kimberly Powell is meant to be the one that he's

been in this affair with.

And it's worse because it was caught on camera by a bystander that caught them

being intimate at some restaurant in San Jose.

And Jensen's security spotted this,

approached the man or the individual and basically got them to sign an NDA.

In exchange for what, I have no idea. But the truth is, it's just not looking great for Jensen Huang.

And this is a shame because I have been and still am in many ways from a professional

aspect, a huge fan of what Jensen has done for the entire industry and how he's built it.

He has identified some of the most impressive opportunities.

And you could argue actually that modern day AI, LLMs,

Anthropic Open Air wouldn't actually be here today if Jensen Huang hadn't bet

the house NVIDIA, GPUs, et cetera, on such a burgeoning industry and sector

back in the day when no one really paid any attention?

Now, if he's asked two questions arise in my mind. Number one,

what happens to NVIDIA as a company? And two, who's going to replace him?

Now, on that second question, I honestly don't have a good answer.

I mean, if I ask you the question, is there anyone obvious in NVIDIA that would replace him?

I don't know if someone naturally would come to mind. But there are some candidates

being considered, one being the head of AWS Cloud Services, Matt Garman, who

has had, or likely one of the very few individuals that has had experience spending

hundreds of billions of dollars on CapEx, especially when it comes to GPUs,

he would need to be poached.

And then the other guy is Thomas Kurian, who does a very similar job at Google Cloud.

These are two infrastructure scaling powers that could potentially,

maybe the sum of them, fulfill or fit the shoes that Jensen had.

But I can't help but think that Jensen has been with the company from the start

and knows the intricacies of how that company is built. In fact,

you could argue that the layout of authority at that company has been perfectly

suited for Jensen Huang. So maybe you need someone completely different.

Now, an alternative view to the replacement is...

To remove Jensen as CEO, but keep him on the board or keep him as chairman so

that he can have some form of influence on the strategy and ideation and goals

and direction as where NVIDIA ultimately ends up headed.

But there are also two other bits of evidence which are pretty damning for Jensen

Huang. The first being the number of chips that he sold to China.

So in the original instance, it was estimated to be around $2 billion to this

company Megaspeed, which Alice Huang, the alleged Chinese spy, was the executive of.

And so that was the number that was attached to it.

Turns out that number is actually over three times larger at $7.5 billion.

And the reason why this is the case is because it wasn't just chips that were sold to Megaspeed.

It was chips that were sold to other Southeast Asian satellite companies in

the likes of Malaysia and Singapore, which were all fronts for basically the

People's Republic of China. And that was discovered more recently.

So the idea here is Jensen Huang was selling chips to China.

Now the big question is, did he know it?

And that brings me to the third and final bit of damning evidence,

which is he might actually have.

Because rewind just about a year ago, the investigations were already being

underway for his relationship with Alice Huang, and it was being hosted by the

Commerce Department of the US.

But at the time, NVIDIA's head of legal counsel reached out when he found out

about the investigation and said, you need to shut this down.

And so the Commerce Department shut it down. But what they didn't tell NVIDIA

and Jensen Huang is that they shifted the case to the Justice Department,

which continued on the investigation and doubled down, especially because there

was a sign of interference.

I'm sitting back and I'm thinking, who directed the head of NVIDIA's legal counsel to reach out?

Everyone reports directly to Jensen Huang. He has over 50 direct reports from

execs. It's a very flat kind of structure. He has these conversations and open.

So I have to say that it's probably a top-down decision and it probably came

from Jensen Huang. So he was probably aware that things were going on and yet

he knowingly still continued selling chips to some of these satellite companies.

I don't want to say things for sure. The investigation is still underway and

I'm rooting and hoping that there's still some good news that comes out of it,

but it doesn't look great for Jensen.

So I now think back to all the countless times over the last year that Jensen

Huang has advocated so strongly for selling chips to China.

And I question what his incentives and motives were, the most prominent one

being his argument with Duakesh on his episode about six months ago,

where Duakesh is pushing him and saying like, hey, it's like.

Imagine you're in a nuclear war and you're selling like enriched uranium to your competitors.

Just because the U.S. is in the lead, why would you sell them enriched uranium?

And Chen Zetong would just hit back saying, it's not the same thing.

Like if we don't sell chips to China, China will still make chips.

And there was kind of like a circular weird end to that argument.

And there wasn't really any real conclusion. And different people took different sides.

And now in hindsight, it looks like he was just kind of defending his placement,

either because he was very naively influenced by a spy or because he knew exactly

what he was doing, but he wanted to double down and make money from it anyway.

But personally, I look at Jensen Huang and I say, he is a fantastic builder.

He, for all intents and purposes, built NVIDIA from the ground up.

And he is the main reason why NVIDIA has grown into such a big company.

I mentioned this earlier.

When you think about the entire AI CapEx bubble, when you think about the entire AI bubble at all,

Anthropics revenue, the demand, the capacity to be able to train new models,

the revenue projections that Anthropics IPO has to inference these models and

to continue selling and making money all depends on this one company,

on this one individual who is making bets.

Remember, NVIDIA and Jensen Huang are the reason that a lot of the financing

has been able to happen because traditional credit financing couldn't fund a

lot of the loans that these neoclouds or hyperscalers required in order to fund the CapEx purchases.

But if he's replaced, if he's ousted and replaced by someone else that is less

risk prone or has a different tactics or strategy your view of the world,

that means that the financial.

Freedom that Jensen Wang and NVIDIA has offered may be pulled back.

It may be restrained. And that might result in the bubble popping.

It might result in the collapse of this entire thing.

And I guess that's my main takeaway from this whole thing. I don't really quite

know where all of this stands. A lot of companies rely on NVIDIA.

If I had to guess, I think the company is going to be completely fine,

not worried too much about the company over the long term.

But over the near term, there's going to be insane volatility because there's

so many deals, There's so much reliance on NVIDIA's GPUs being effectively delivered.

All of this is going to distract away from that.

It's going to cause people to churn and quit and lose trust.

I can just see this impairing the ability for the entire AI movement.

You see, the story isn't just about NVIDIA or Jensen Huang or his affairs.

It's not about the gossip column.

It's about how this affects the entire AI economy. From a competitive aspect,

I can see reputationally some AI labs potentially wanting to move away from NVIDIA chips.

And this is like a hot take from me to maybe try and use other types of competitor products.

Now, we're already seeing a major shift to Google. I'm sure Google is smacking

their lips at all of this drama because they just released two brand new TPU

products, TPU being the main competitors to GPUs.

So they're probably looking at this and thinking, yeah, okay,

cool. I will ramp up TPU production and eat into NVIDIA's 90% monopoly.

AMD is probably doing the same thing. Anthropic signed a major deal with AMD

buying loads of their GPUs.

OpenAire is doing the same with AMD and with Google as well.

So I can see NVIDIA losing their

market share on the GPU market just from this one instance and event.

And of course, we'll have to see how things play out. I think in the worst case

scenario, if he does get replaced, there will be some churn,

there'll be some movement, there'll need to be some rebuilding of trust with

whoever the new person is, but they'll end up figuring it out.

Again, I'm an optimist for AI in general. And the reason why I'm so rocked about this isn't by.

Necessarily the gossip and the affairs, which are bad in itself,

but how it affects the whole AI economy.

Now, speaking of the AI economy, there could be a worse timing for one of the

biggest, if not the biggest AI IPO coming up rumored to be next week, which is Anthropics.

And Anthropics IPO has, thankfully, a bunch of good news around it.

Anthropics IPO is around the corner. And the valuation, as of two days ago,

was estimated to be around $1 to $1.3 trillion.

And the new story here was that they started their IPO roadshow officially.

A few headline stats is they're going to issue around, I think it's 825 million shares,

with the bulk of that coming from employees, mainly the founders,

who are all going to sell, or each of them going to sell around 3.3 million

shares, which is roughly around

$360 million at the top end of the price range if they were to sell each share around $78.

That is a hell of a payday for each founder. But they're also giving their underwriters,

so the banks, JP Morgan and Chase, and I believe it is Goldman Sachs,

the ability to buy another $10 billion.

So the initial raise or what they're planning to raise is around $64 billion.

And then they're giving banks an additional $10 billion.

But there's also a secret side deal, $26 billion allocated to seven companies,

which includes the likes of NVIDIA,

AMD, Micron, Google. Now, these

are all companies that have extreme stakeholder interest in Anthropic.

And ironically, are the companies that Anthropic are already buying from.

So, Anthropic has a huge CapEx commitment, right?

It's around $900 billion, almost a trillion dollars worth of CapEx spend that

they need to spend over the next couple of years, with around,

I think, $70 billion of that being committed to over the next 12 months.

Now, Anthropic, if you look at their cash balance sheet, is looking pretty reasonable.

Right now, it's around $130 billion.

And after this raise, it would put them at around $200 billion.

So you could argue that they have enough money to pay for these things.

But it is sort of weird that the companies who they're paying money to are now

reinvesting money back into Anthropic.

Now, actually, when I sit back and look at this, I think, okay, well, that makes sense.

If these companies are incredibly bullish in Anthropic, and they are one of

the leading frontier labs, certainly by revenue, they recently cracked around 80 billion worth of ARR

over the last month, they jumped another $10 billion, just insane rapid progression,

you'd probably want to double down.

And listen, Google already is a major stakeholder in Anthropic,

I think they own around 17% of the company, they sell almost all of their TPUs

to Anthropic because there's an insatiable demand there.

So it makes sense to just increase their stake. And it makes sense if you are

a memory manufacturer like Micron, you want to do the same thing.

If you are a GPU provider like NVIDIA or AMD, you also want to do the same thing.

And so Anthropic has offered the ability for another 26 billion.

Now that would put the rough raise estimate at anywhere between,

I think, 70 to 80 billion dollars roughly, which is around the same ballpark

that SpaceX actually raised.

Except that new news suggests that the round is massively oversubscribed.

Despite the market downturn, despite the crazy valuations, it's obvious that

investors want to buy the Anthropic IPO to the point where this might get pushed to $100 billion.

Worth of capital raise on IPO day, which is the largest amount that we've seen from any company.

And it beats SpaceX's previous record that was only set a few months ago.

Now, this would mean Anthropic would have around $212 to $220 plus billion of

just cash on their balance sheet.

In fact, one stat that surprised me from the initial S1 filing was that per

dollar compute spend, they generated around $2 of revenue.

So that margin, I'm sure we'll get eaten into depending on how much they need

to expend on CapEx going forwards, But that indicates that there is a positive

ROI somewhere soon in Anthropik's future post-IPO.

Now, some other important takeaways from Anthropik's roadshow that is currently

underway. Apparently, a few statements they're making are quite bold.

One of the main ones being our reliance on SpaceX, buying compute from SpaceX.

I think they're spending around $1 to $3 billion per month to access or acquire SpaceX's compute.

SpaceX being one of the number one Neocard providers because Elon Musk acquired

all the GPUs, they're looking to sever that relationship, that contract by at

least the middle of 2027.

So they pretty much are saying they have a confident path to getting enough

compute at a very fair rate, whether it's their own chips that they're spinning

up or access to NVIDIA GPUs or access to AMD GPUs

such that they can replace the expensive premium that they're paying Elon Musk.

Now, the immediate thought that pops to my mind is, would Elon Musk still be

able to charge the premium that he is, that is earning SpaceX's.

A load of revenue right now? And does that put into question SpaceX's revenue projections?

Like he famously said on his most recent quarterly earnings report that he expects

around anywhere between $500 billion to $1 trillion of ARR by the end of next year.

Anthropic is one of their major cloud customers. So if Anthropic severs that

tie by mid next year, that could threaten his estimate.

The second is Dario seems to have taken a shot at open source saying that open

source lacks the talent that Anthropic has and that Anthropic has better stability.

And what he's inferring here is that, listen, we haven't been releasing models

as frequently as we could have, and we would have expected by now for open source

to have then caught up, but they haven't.

And that would imply that the talent, the resources that are required to build

bleeding frontier level models isn't available to open source.

And so he's kind of putting the death knell on them. They're saying,

yeah, see, I told you they can't make it.

You have to bet on Anthropic because we're the only ones that are going to make it.

And the third bold statement that he makes is that the AI market is a winner-takes-all market.

And as long as we execute properly, we're going to take it all,

we being Anthropic in this case.

So there's some very bold statements that you would expect ahead of an IPO.

He's talking his book. They're talking their game. Now, on the point of AI companies

crushing their revenue targets, I want to point out a very obvious narrative

violation, which is being pebbled over the last couple of weeks, which is

NeoClouds, especially the smaller ones like CoreWeave are going to implode because

they're over leveraged.

And number two, that data centers aren't generating enough revenue to trickle

down into the communities that they're being built.

Both of those have just been disproved. And I wanna get into it on today's segment

brought to you by Qualcomm.

Now, off the bat, Corweave crushed their earnings. They beat it on revenue.

Their backlog is growing around 30% from the previous quarter,

which is absolutely insane. I think it's around $130 billion or so.

And they have enough power to set all of this up. So the financial loans as

well that they're taking are also at a reasonable rate.

Apparently, the next loan that they take is going to be between,

I think, 7% to 8%, which is considered investment grade.

So what I'm saying here is all the accusations from the bears around NeoCloud's

imploding, which came from the likes of Chamath and Elon Musk saying CoreWeave

might be questionable at this point, was actually false.

But the other thing I want to point out is the demand for CoreWeave's GPUs,

which is a good barometer for the rest of the NeoCloud industry.

Is overwhelming to the point where they have 10x qualified demand for the available

capacity that they have.

So what that means is 2027's capacity completely sold out.

And any capacity that is coming online right now, which they're trying to figure

out for 2028, is being sold immediately for a premium.

But it's not just the brand new GPUs that they're sending out.

It's also the older GPUs. You see, they have old NVIDIA GPUs like Hoppers,

for example, which are selling at a premium.

I think it's around 30% to 50% above the average rental price.

And that's increased over the last couple of months. So remember,

GPUs don't necessarily need to be used for training. They can be used for inference,

routing, whatever that might be.

They can have a home to service this entire AI economy, which means that the

depreciation cycle, the life cycle, the extent, lifespan of a GPU goes way beyond

what we were originally expecting.

And that's an important point to keep in mind. Okay, okay. But what about the data centers?

We recently had elections here in the US, the midterms, where it was a sweep

for the Dems. And the main policy effort around the Dems was apparently they.

Forbid or are against AI data centers.

And the idea here is they're going to slow down up to 45% of data center capacity

that is coming online next year.

If that ended up happening, this would quell the entire momentum of AI and it

would slow a lot of progress down. So all the revenue that Anthropic is making,

all the revenue that SpaceX is making is ultimately going to slow down because of this.

This doesn't necessarily seem to be the case. On one hand, you have the Memphis

mayor saying from a single data center hosted by Elon Musk, this must be Colossus

1, 2, or whatever that might be,

they have earned between $20 to $54 million.

Worth of taxes from this data center, which makes this single data center site

from the single individual, single company, the largest taxpaying entity for that state.

So just to put that into context, AI data centers are generating more revenue

for these individual township states that they are placed in than we've ever seen before.

That money can be used to subsidize property taxes, subsidize electricity bills,

pay teachers higher bonuses that we're seeing in Louisiana, for example.

The idea here is that wealth from AI is actually trickling down into the regular

locals and individuals of where these data centers are placed.

And if you also look at SpaceX's Arizona data center, the leader there basically

said we could actually reduce property taxes up to 20% in a specific county

because of how much money we're making from them.

Okay, and then quickly, the last two stories, Gemini Carbon,

which is Google's latest model, which up until Fable 5.2's release was theoretically

the number one model, is officially publicly available.

But also in other Google news, they released two brand new versions of their

TPUs, TPUs being the main competitor that they have to NVIDIA's GPUs.

And you could argue that Google's TPUs is the second most threat to NVIDIA's entire monopoly.

Anthropic OpenAI are making huge problems.

Billions of dollars worth of purchases of Google's TPUs to train and inference their models.

Google came up with two new versions. And what I find interesting about these

two versions is one is optimized for private confidential compute.

So it's optimized for your data not leaking.

Why I think this is important is if you're an enterprise or Fortune 500 company

that is fearful of Anthropic or OpenAI stealing your data and training,

I guess, an AI version of your own product and service and eventually replacing

you, you don't want to give them your data, but you're ending up using their models.

What if you could secure it at the infrastructure level? I think Google's TPUs

will be a good instance to eat into that market share and sell potentially tens

to hundreds of millions of dollars worth of compute that way.

But the other version is specifically optimized for long agentic horizon coding, which means that.

This narrative, this trend that I'm seeing of AI becoming really good at long,

hard, complex tasks and it being able to act independently on its own and not

come to you for help or approval all the time is ultimately the trend that we're going to see happening.

And the final story is Meta is back on the scene with a new model.

It's not their biggest model. It's not their most impressive or intelligent

model, but it is their cheapest model. It's called Meta Ember,

and it basically competes with the cheapest tier of all the frontier labs.

So if it is ChatGPT, it's going to be Luna.

And if it is Anthropic, it's going to be Claude Haiku.

Now, it comes in at only a third of the cost for each of those individual competitor

models. So it's incredibly cheap.

And the idea here is it's not meant to be used for your most hardest work,

but it's meant to be used for the bulk of the work that you already know what needs to get done.

You need a model that's just intelligent enough, but doesn't need to be the most expensive.

This can be your workhorse model, and it's going to come in cheaper than anything.

And this honestly echoes Zuck and Meta's entire strategy around AI since the

start, which has been, we will provide you the cheapest AI model possible and

we will beat our competitors on cost.

And that will result in getting AI into the hands of as many people as we can,

which means that we'll end up owning the entire market.

It's an interesting thesis. We'll see if it plays out. But that is today's episode.

Lots going on this week. So much more happening next week if we have the Anthropic

IPO and probably a new open AI model, hopefully GPT 6.2 Astra.

So yeah, thank you so much for listening. And if you enjoyed this,

please share it with a friend. If you're listening to this on YouTube,

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leave us a comment, turn on notifications. It helps us out massively.

And yeah, thank you for listening to today's episode brought to you by Qualcomm.