Jensen Huang's exit raises doubts over Nvidia's funding of AI startups
After Nvidia CEO Jensen Huang stepped down following 33 years at the chipmaker, investors expect the company to pull back on funding AI startups. That could affect dealmaking, valuations and competition in the sector.
Jensen Huang, co-founder and chief executive of US chipmaker Nvidia, has officially resigned after 33 years leading the company. According to TechCrunch, investors and startup founders believe the move could significantly reduce funding available to artificial intelligence (AI) startups, because Nvidia has been one of the sector's most active backers in recent years.
PitchBook data shows the company took part in 105 funding rounds this year, often as the largest investor, and it puts tens of billions of dollars into startups annually. One founder of a "neocloud" company (a firm renting out computing capacity for AI) compared the news to a bomb going off.
What investors expect
Colette Kress is serving as interim CEO. Investors expect her to change the investment approach; one described her as much more conservative than Huang. His aggressive dealmaking in the AI field had already worried Wall Street.
Nvidia's biggest bets have been on neoclouds, inference providers and open-weight models. It backed CoreWeave, took part in two Crusoe rounds including a $1.4 billion Series E, and this year agreed to buy Hugging Face for $13 billion, with the deal expected to close in 2027. It also holds stakes in Mistral AI, Lambda and Black Forest Labs. Last year it put $800 million into Reflection AI's $2 billion Series B.
Impact on the sector
Investors say Nvidia's participation gave other funds the confidence to back startups at high valuations. The company is now expected to be more selective and write smaller checks to existing portfolio companies, which could push valuations down. Some investors hope large cloud companies and other chipmakers will fill the gap, but they doubt these firms will fund pre-revenue startups on the same scale. A less dominant Nvidia could also leave more room for rivals.
Still, few believe a slowdown in Nvidia's investing will by itself end the AI boom.
