Forget Nvidia CEO Jensen Huang’s Affair Scandal — There Are Far Bigger Issues With the AI Trade
Earlier this week, the backbone of the artificial intelligence (AI) revolution, Nvidia (NVDA +2.87%), rocked Wall Street. According to CNBC, the company’s co-founder and CEO, Jensen Huang, admitted to an affair with an alleged Chinese spy. Then, on Nov. 11, The New York Times reported that Huang had a second affair with an employee who reported to him.
Not only is Huang synonymous with Nvidia’s success, but he’s arguably the figurehead of the AI data center build-out. Nvidia’s graphics processing units are what make data centers tick, and the company’s seemingly countless deals have fueled the AI infrastructure build-out. An investigation launched by Nvidia’s board has clearly unnerved investors, and there’s now, as of 7:30 p.m. ET on Nov. 11, talk of the board ousting Huang as CEO.
While Jensen Huang’s affair is certainly headline-worthy and pertinent to Nvidia’s shareholders, there are far bigger issues with the AI trade than the goings-on in Huang’s personal life.
Image source: Getty Images.
Election Night put the AI infrastructure build-out on shaky ground
For example, Election Night threw AI stocks for a loop.
On the one hand, prediction markets correctly forecast a Democratic blue wave in Congress weeks in advance. However, the gubernatorial blue wave was unexpected, with at least five Democratic candidates flipping governorships previously held by Republicans. Two states remain uncalled by the Associated Press, as of Nov. 9.
Gina Hinojosa may not be as bad for Texas data centers as it looks. Her plan asks for: no subsidies, union labor, no NDAs, and proof household power and water bills won’t rise. Much of that is already underway: Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI pledged in March to bring their own power and pay for transmission Microsoft pledged to pay full property taxes without seeking tax breaks Nvidia is working with Vistra, NextEra and Constellation on data centers that cut power use when the grid is strained
— Wall St Engine (@wallstengine) November 4, 2026
The concern is where Democratic governors won: Texas, Ohio, and Georgia. These three states are near the top of the list in terms of future data center capacity. Texas Gov.-elect Gina Hinojosa has pledged to ban new data center approvals until her state’s legislature passes laws governing electricity and water rights, among other factors.
The stock market entered 2026 at its second-highest valuation over the last 156 years. The AI infrastructure build-out is the only reason investors have tolerated such an aggressive premium. If this build-out slows, even marginally, at the state level, it could have significant ripple effects throughout the AI trade.
Image source: Getty Images.
The bond market is sending an unmistakable warning to investors about AI stocks
Furthermore, the bond market is sending Wall Street and investors a message that can no longer be swept under the rug.
While some companies are using cash on hand or issuing stock to fund their data center expansion or large language model development, many are relying on debt. When public companies issue debt, it’s typically priced around a par value of $1,000, which financial websites express as $1. When bond traders are confident that a company will meet its debt obligations, bond prices often hover around $1.
Throughout much of 2026, we’ve witnessed an absolute rout in bond prices for AI companies. The 2056 notes issued by Elon Musk’s Space Exploration Technologies (SPCX -2.33%) (better known as SpaceX) in June have fallen precipitously to $0.83. Meanwhile, Nvidia’s 2060 notes are trading at just $0.63.
Credit markets are flashing WARNING SIGNS across the AI trade: Oracle, $ORCL, 5-year credit default swap (CDS) spread has surged to ~263 basis points, while SpaceX’s has risen to ~203 basis points, both at record highs. At the same time, CoreWeave’s $CRWV, 5-year CDS is up to a record 982 basis points. This comes as tech companies have issued nearly $500 billion in new debt this year to finance AI infrastructure, with 9 US investment-grade bond deals worth at least $25 billion each. The growing debt burden is colliding with uncertainty over whether AI revenues will justify the enormous spending. As a result, investors are increasingly demanding higher compensation to take on credit risk. Oracle’s market-implied 5-year default risk has risen above 20%, compared with around 16% for SpaceX and more than 7% for Nvidia. The pressure could intensify further, with Goldman Sachs projecting hyperscaler debt issuance to jump from $250 billion in 2026 to a massive $420 billion in 2027, as 35% of next year’s capital spending is expected to be debt-funded. The AI boom is now testing credit markets, as investors begin repricing the risks behind Big Tech’s unprecedented borrowing spree.
— Global Markets Investor (@GlobalMktObserv) October 14, 2026
These discounts imply serious concern about the sustainability of capital expenditures tied to the AI build-out.
Don’t forget that every game-changing tech innovation since (and including) the advent and proliferation of the internet has navigated an eventual bubble-bursting event early in its expansion. It’s unlikely that AI will be the exception to this unwritten rule, and bond traders know it.
While Jensen Huang’s admission of an affair is front-page news, it doesn’t hold a candle to the structural issues facing the stock market’s No. 1 catalyst.
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