Five reasons why Nvidia matters - and what’s now at stake 

[SAN FRANCISCO] It’s not often that a revelation about a relationship erases a trillion dollars of value from the stock market. But that’s what’s happened in the wake of media reports that a woman suspected of being an asset for Chinese intelligence had grown close to Nvidia CEO Jensen Huang, who acknowledged having an extramarital affair.

The wipeout speaks both to the chipmaker’s sheer size – at around US$4 trillion, Nvidia’s market capitalisation is comparable to the national economic output of Japan, the UK or India – and to the pivotal role of its leather-jacketed, celebrity CEO.

It was Huang’s decision to pivot Nvidia’s focus from graphics chips for gaming to the artificial intelligence “accelerators” that have made it one the world’s biggest companies by market value, and his globe-trotting lobbying has helped to maintain its dominant position.

Hence the sharp sell-off of Nvidia’s shares when the espionage scandal raised questions about his future at the company. A spokesperson for China’s government called the “so-called Chinese spy allegation” unsubstantiated.

Here’s why the stakes are so high.

Market titan

On Nov 30, 2022, a then-little-known company called OpenAI released a chatbot called ChatGPT, triggering an explosion in demand for a type of computing chip that Nvidia was uniquely well-placed to provide. After that, Nvidia’s share price rose fourteen-fold to a peak on Oct 6.

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The company witnessed soaring demand from data-centre customers, including Alphabet, Amazon.com and Microsoft. In mid-2024, it overtook all three by market capitalisation for the first time. In 2025, Nvidia became the first company to surpass both US$4 trillion and US$5 trillion in market value.

By early October, it was closing in on the US$6 trillion mark. Since then, it’s fallen behind Apple as the world’s biggest company. Investors have become increasingly skittish over frothy AI stock valuations and an industry borrowing spree.

And the Democratic sweep in the US midterm elections has cast doubt over the sustainability of an AI data centre construction boom. By Nov 10, the revelations about Huang’s affair had pushed Nvidia’s valuation to a level almost on par with the No 3 company, Microsoft.

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Chip supremacy

Nvidia today accounts for an overwhelming share of sales of the advanced chips that process AI tasks. Its dominance partly reflects a substantial head start: Years before AI really took off, the company was investing in ways to use its graphics processing units for uses beyond gaming.

It has maintained that lead by rolling out new designs every year. Its size and purchasing power have kept it ahead of the game, making it harder for smaller rivals to keep up. 

Now is a particularly bad time for the company to be risking a leadership crisis. Nvidia’s rivals, and even some of its customers, are working hard to develop competitive AI chips. A raft of startups are raising billions of dollars from investors keen to back the next breakthrough.

Competition is also intensifying in China, where the company is prevented by US export controls from selling its most advanced products. Companies such as Huawei Technologies – blacklisted in the US – are making rapid strides in developing home-grown AI chips, Nvidia has said.

AI finance linchpin

Since 2024, Nvidia has become not just a supplier to the AI industry but also one of its key financial backers. It has invested heavily in leading AI platform developers including OpenAI, Elon Musk’s SpaceX and France’s Mistral, as well as companies building AI data centres.

It’s a symbiotic relationship: Nvidia helps to finance the expansion of AI infrastructure, stoking demand for Nvidia’s chips. 

Portfolio dominance

Until mid-2020 Nvidia’s market capitalisation represented less than 1 per cent of the total value of all the companies tracked in the S&P 500 index, the standard benchmark for the US stock market.

For much of the past two years, Nvidia’s share hovered around 8 per cent, the largest slice of any company. In the wake of the news about Huang’s relationship with the suspected spy, it fell below 7 per cent and lower than Apple’s share.

Because of the company’s weight, its health can significantly affect the overall value of the S&P 500, to which enormous amounts of money are tied.

Some US$20 trillion in assets is either indexed or benchmarked to it, according to S&P Global. These are held largely through retirement funds, mutual funds and exchange-traded funds.

Key-man risk

Huang is known for his exacting management style, even in an industry full of domineering CEOs who obsess over details. Every major decision flows through him, and he weighs in on even the most minute aspects of the business.

Huang has about 60 people reporting to him directly, far more than the average tech leader. They send him e-mails with “top five things” that he reads and responds to at all hours. 

The spy scandal has underscored Nvidia’s “key-man” risk: Its 63-year-old CEO is seen as inseparable from the company’s success.

The board wants to keep Huang as CEO if possible, according to an employee who asked not to be identified, but an independent committee is investigating his actions.

Huang’s potential exit would put Nvidia in an unusually vulnerable position for a company of its size: There’s no one designated to replace him. BLOOMBERG