Hello and welcome to Eye on AI. Jeremy Kahn here. In this edition:
Nvidia was built around one man. Now a spy scandal threatens that model. Before the scandal broke, Nvidia CEO Jensen Huang spoke to Fortune about China policy. Anthropic looks to price its IPO at a $1.4 trillion valuation. Anthropic debuts new Fable model at a price 20% below OpenAI. OpenAI unveils a new cyber model. Anthropic inches closer to RSI, worrying AI safety experts. AI infrastructure provider Fireworks hacked. Google DeepMind achieves a breakthrough in formal verification. Podcaster Dwarkesh Patel has an interesting new AI benchmark.Before we get to the news, can I just say, you are not going to want to miss this year’s edition of Fortune Brainstorm AI San Francisco. We have an exceptional line-up of speakers for you: OpenAI president Greg Brockman and Microsoft AI CEO Mustafa Suleyman will both be onstage. Once the closest of partners, their two companies are increasingly, competitors, so I’m eager to hear how differently they see the road ahead. AI pioneers Fei-Fei Li, now of World Labs, as well as Andrew Ng, now of LearnVector, will be discussing their view of AI’s future too. Palo Alto Networks CEO Nikesh Arora will talk about AI and cybersecurity. Greylock partner Reid Hoffman, CapitalG’s Jill Chase, and Kleiner Perkins’ Mamoon Hamid and Ilya Fushman will weigh in on where the money is going. Recursive Superintelligence’s Richard Socher will talk about RSI and automating AI research.Plus, we’ve got Nick Fox from Google. We’ve got Fireworks CEO Lin Qiao. We’ve got Cerebras’ Andrew Feldman, Vanta’s Christina Cacioppo, Unconventional AI’s Naveen Rao, Brex’s Pedro Franceschi, Maven Clinic’s Kate Ryder, Box’s Aaron Levie, Atlassian’s Mike Cannon-Brookes, New Work Foundation’s Clara Shih, Twilio’s Khozema Shipchandler, Rubrik’s Bipul Sinha, Harvey’s Winston Weinberg, Dynamic Creatures’ Marc Theermann, SendCutSend’s Jim Belosic, Apptronik’s Jeff Cardenas, Accenture Song’s Ndidiamaka Oteh, and Senra Systems’ Jordan Black. It’s going to be epic. So please join me and many of my Fortune colleagues at the St. Regis in San Francisco on December 7th and 8th. You can apply to attend here.
The biggest news this week in AI has been the revelation of Nvidia CEO Jensen Huang’s affair with a woman that U.S. intelligence reportedly believes is a Chinese spy. Whether Jensen manages to stay in his job is an open question. A lot of that will depend on exactly what Jensen knew and exactly what information he disclosed to Alice Huang, the woman at the center of the scandal. As more information comes out, it is already not looking too good for the embattled Nvidia CEO. In addition to Nvidia’s board announcing an independent investigation, House Republicans have already called the CEO to testify at a closed door hearing next week, and U.S. President Donald Trump, who initially defended Jensen, has said the FBI is now investigating the case too.There seems to be mounting evidence that Jensen knew or should have at least suspected that Alice Huang’s company, Megaspeed, was involved in supplying advanced Nvidia chips to Chinese companies, either allowing them to access those chips in data centers it set up in Malaysia (which would have been legal under U.S. law prior to 2025 but not since then), or by smuggling Nvidia GPUs directly into China (which would have violated U.S. export laws). If Jensen was complicit in smuggling advanced Nvidia chips into China, that would probably be enough to force his resignation.The New York Times also reported that Nvidia’s general counsel intervened in 2025 to get a Commerce Department investigation into Megaspeed moved to the Justice Department, where it seems to have languished. If more emerges showing that Jensen used his clout to shield Megaspeed from federal investigators, that too could make it difficult for him to stay on as CEO. And, if it turns out that he passed Alice Huang confidential information about discussions he had with President Trump or about Nvidia’s chip designs, then he is probably toast too.If Alice Huang was, as some reporting suggests, primarily trying to influence Jensen’s position on export controls, then the picture may not be as bad for him. The Nvidia CEO’s stance on the export of chips has been remarkably consistent going back to a period before he is believed to have met Alice Huang. Plus, he didn’t exactly need convincing to oppose export regulation, given that Nvidia once made a lot of money selling its GPUs in China.
Jensen Huang’s position on exports to China hasn’t changed
When my colleague Beatrice Nolan and I sat down with Jensen in London a few weeks ago, before news of his affair broke, he told us the U.S. should want Nvidia to compete in the Chinese market. “I think the opportunity in China is large and growing, just like the AI market across the world is large and growing,” he said. “We could be of great service to the local market. We can compete and win as much of the AI market as possible for the United States, while also providing compute resources, which is really important to their economy.” Bea has more on what Jensen told us about China in a story she published earlier this week which you can read here.If Jensen does end up stepping down, that could have ramifications for the entire AI boom, although it is likely that any successor would continue to try to provide financial support to the same cluster of AI labs, startups, and neoclouds that Nvidia has funded. That said, Jensen was a singular force. He ran Nvidia as if it were a giant startup, without a clear successor, or even clear candidates, and with a remarkably flat management structure. Jensen famously had between thirty—and at one point 60—direct reports. He had, by many accounts, a direct role in almost of all the business’s key decisions. If he goes, the company could stumble and its core business could suffer.
Even if Huang stays as CEO, U.S. AI regulation is now more likely
Even if Jensen manages to hang on as Nvidia’s CEO, his influence on U.S. policy is likely to be greatly diminished. And that may have several key implications.The most obvious is that the China hawks will have removed a key opponent of more restrictive export rules on selling chips to China. In fact, this may have been the main reason that someone has leaked the U.S. government’s conclusions about Jensen and Alice Huang at this time.The less obvious policy implication is that Jensen has become a leading advocate for open source AI and was opposed to any government regulations that might impose licensing standards on these models that could effectively limit or eliminate their distribution in the U.S. With Jensen out of the way, those who believe open source AI models pose risks that cannot easily be mitigated will have a better chance at getting the federal government to enact licensing rules on all AI models.We will have to see how this story develops over the coming days, weeks, and months. But one thing is clear: the AI boom’s biggest booster has been humbled.
With that, here’s more AI news.Jeremy Kahnjeremy.kahn@fortune.com@jeremyakahn
Before we get to the news, just a reminder to check out our new vodcast, Fortune AI Weekly. This week, Beatrice Nolan and I talk to Ramp’s lead economist Ara Kharazian to find out what’s really going on with AI spending, ROI, and jobs. We also discuss the Democratic sweep in the midterm elections and its impact on AI. And we talk about Google’s controversial policy on schools using, or choosing not to use, its Gemini AI models. You can check out the vod here on YouTube.
This story was originally featured on Fortune.com
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