Huang’s abrupt resignation as CEO leaves one of the world’s most valuable companies without the leader who has steered it for the past 33 years; the person who almost singlehandedly transformed Nvidia from a small maker of video game graphics chips into the driving force of the AI boom. 

“NVIDIA’s leadership crisis is a stress test for the AI boom,” Stephanie Balaouras, Forrester’s VP, group research director, told Fortune. 

The importance of Nvidia, and of Huang, to the AI industry extends well beyond the company’s own P&L statement. In addition to being the leading maker of the GPU chips powering AI services like ChatGPT and Claude, Nvidia has become the AI industry’s “central bank” financing scores of other companies. And then there’s Huang’s unique standing as AI’s senior statesman and cheerleader on everything from AI regulation to industrial policy.

Whether the AI industry turns out to have lost its most famous champion with the ignominious exit of Huang and his famous black leather coat, or a more crucial, Jenga-like piece may be the most important economic question to be answered in the coming weeks and months.

“Obviously Nvidia is more than Jensen Huang, but he kind of championed a whole range of investments,” a VC investor focused on early-stage companies told Fortune.

“There is a question around whether the pace of investment in AI and the size of the amounts of capital going into companies can be continued. Because by any stretch of the imagination, it’s been quite extreme,” the investor said.

In the immediate aftermath of the news, the stock market appears to be keeping its composure. While shares of Nvidia were down 6.3% in midday trading on Thursday, and certain AI-linked stocks took a hit, the broader market reaction was relatively muted, with the Nasdaq down only 95 points. 

But with spending on AI and data centers so important to the broader U.S. economy, the extent of the potential fallout from the Nvidia shakeup is difficult to overstate.

Looming largest on the horizon is Anthropic’s widely anticipated initial public offering, scheduled to occur next week. The Anthropic IPO (along with OpenAI’s IPO expected in 2027) represent make-or-break moments for the AI industry—closely watched events that will serve as proxies for the health, and momentum, of the AI business.

If nothing else, one startup founder told Fortune, the Nvidia drama raises the stakes for Anthropic’s upcoming IPO: “If the Anthropic IPO doesn’t go well and if the OpenAI IPO [down the line] doesn’t go well, there’s a question of: Is there a path to profitability for any players in the AI space?”

Antropic is seeking to raise upwards of $60 billion in the offering slated for November 18, giving the five-year old AI company a valuation that could exceed $1.4 trillion when it makes its expected Wall Street debut next week. 

Karl Alomar, a partner at venture firm M13, argued that investors will recognize the strength in Anthropic’s business, regardless of the Nvidia shakeup. 

“From where I stand, Anthropic is still in as good, as strong and as good a position as it was before this news came out,” Alomar said.

“I’m not sure it’ll have a massive impact on them. Anthropic’s numbers are fantastic, and they’ve clearly shown that they have excess capacity for what they need,” he said. 

Last stop for the money train?

Anthropic’s business prospects are closely intertwined with those of the cloud providers, which provide the data centers and compute capacity to train and run AI models like Claude. (According to Anthropic’s S-1 filing, it has roughly $900 billion in compute spending commitments over the next several decades.)

While the tech giants like Alphabet, Amazon, and Microsoft have the wherewithal to ride out whatever turbulence is caused by the changes at Nvidia, the situation may be trickier for the smaller “neo-cloud” companies—many financed by Nvidia—that buy Nvidia chips in bulk and rent out the computing power.

Huang has championed these neo-cloud companies because it was good for business and the company’s influence, Jay Goldberg, an analyst at Seaport Research Partners and one of the few on Wall Street with a sell rating on Nvidia’s stock. “He’d rather have 300 small customers who are dependent on him than three massive ones who you can’t negotiate with,” he said.

With Nvidia CFO Coleen Kress now serving as interim CEO, the company’s attitude towards neo-clouds could shift. According to a report in The Information on Thursday, Kress has occasionally pushed back against Huang’s deals in the AI ecosystem, including a deal to backstop $250 billion in credit for an OpenAI datacenter project.

The “Nvidia money train” that has kept parts of the market that propped up could come to an end, said one venture capital partner invested in numerous AI startups. “ The idea that they could count on Nvidia for future financing is unlikely.”

Shares of CoreWeave one of the leading neocloud providers were down 7.5% on Thursday, while Nebius Group, another neo-cloud company which gave a lighter-than-expected sales forecast during its quarterly earnings on Thursday, were down 18%. 

Investors are likely to look harder at the numbers Huang used to justify the complex web of investments. Jason Schloetzer, an associate professor at Georgetown University’s McDonough School of Business, expects investors and policymakers alike may start re-examining “Jensen math.”

Incoming: regulation

U.S. policy towards data centers could also come in for harsher treatment, particularly after last week’s midterm elections in which voters overwhelmingly registered their opposition to having the facilities built in their communities. 

Huang gave much of the industry credibility, even amid the backlash to datacenters. He was well-liked and not seen as a polarizing political figure, said Goldberg, of Seaport Research. But with Huang gone, the data center industry becomes “much more vulnerable to political pressure,” he said Goldberg. 

Similarly, lawmakers advocating stricter regulation of AI technology, both the large language models as well as the chips that power the models, now have a much stronger hand. Huang was an outspoken proponent of loose regulations for AI. But his affair with a woman alleged to be a Chinese spy has destroyed his credibility on the regulatory issues. 

“This guarantees new export controls,” Ed Mills, policy analyst at investment firm Raymond James, said of the spy scandal that contributed to Huang’s downfall. “It was extremely likely before the scandal and this is the accelerant to push it over the finish line.” Three bills proposing new export controls on AI chips and advanced semiconductor equipment are currently attached to the defense authorization bill awaiting passage on Capitol Hill.

It is also possible that Washington will enact licensing requirements or restrictions on open-source AI models. Huang had been a leading voice opposing such measures. Because the best open source models on the market have been created by Chinese AI labs, “open source equals China” in the minds of many lawmakers, particularly China hawks, Mills said. “If Washington is serious about trying to win the AI race against China we need to see regulations on open source,” he said.

Brad Carson, the former Democratic Congressman who is now president of Americans for Responsible Innovation, a lobby group that supports AI regulation, said he was less certain of the threat Huang’s removal as CEO poses to open source AI. Even after Huang’s downfall, such licensing requirements are unlikely given the support open-source AI has among certain factions in Congress and the technical difficulty of designing effective rules for these models, he said.

The AI policy push will happen against the backdrop of a widening investigative effort, with Nvidia’s relationship with companies such as Megaspeed and Super Micro under the microscope.

“What’s happened at Nvidia is for Nvidia to address,” said Tony Ball, CEO of Entrust, a digital security company. “But in terms of the way AI is going to continue to add value to organizations and productivity, this was an inevitable structural challenge, and governance and policy issue that the world was going to have to wrestle to the ground.”