Transcript of NVIDIA CEO GONE! National Security Nightmare Engulfs Trump

CFO Colette Kress will take over as interim CEO. So much to unpack here, Jess. I'll talk about the business end, but first, you talk about the political end. What do you think this means? What kind of ramifications do you think this has on the Trump administration, defense, security department? Any thoughts here about how this impacts Washington?

That is insane, that they knew that someone directly tied to the Chinese Communist Party in their group, their tiny group that could go on Air Force One and be part of this delegation, was being exposed in this way. Obviously, there's a Kraven money angle to this and the idea that our entire economy is being propped up by seven companies, which I want you to talk about more. But when you think about accountability and what investigations look like in the new term, once Hakeem Jeffries and Chuck Schumer are in charge, this is one of the things that springs to mind.

Like, how is it possible that the Trump administration were comfortable with this, or even if they were uncomfortable, that they still made themselves or twisted themselves into a pretzel to allow something like this to happen? We will, I assume, never find out exactly what it is that the spy, I believe her name was Alice, right, was relaying back to the Chinese government. But you have to have the expectation that it is absolutely everything possible and that while he slept, she was digging through his stuff, the kinds of things that he was telling her.

And they've been photographed together going back years at this point. So enormous ramifications for the Trump administration right now, but also for the agenda of the Democrats as they're looking to what it looks like to actually have some power on Capitol Hill.

I mean, this is just going to get when you think about how many people, whether it's people in universities, whether it's people, the brightest scientists in the world at Lawrence Livermore Lab, whether it's our millions of servicemen and servicewomen, whether it's hundreds of thousands of people working to build the best aircraft carrier in the world, trying to keep Americans safe. And to think that, okay, Jensen Huang always had these two rules for staying CEO: don't get fired and don't get bored.

It ends up there was a third rule. And it ends up that I think this is going to be the greatest national security breach in history. And I mean, just imagine what might have happened here. So Jensen had been actively advocating for selling more chips into China. Everyone thought, okay, that's wrong, but he just wants to get the share price up. As far as we know, this played out. Jensen, my love, it's Alice. I've got such terrible news. Someone who claims to be from the CCP called me and said they're going to unmask our affair in the most aggressive, uncomfortable, ugly way possible.

But they said that maybe they won't if you continue selling chips into my company more than we need. The Commerce Department went down there and found unpacked boxes of GPUs, meaning they were likely going somewhere else. You could even see them buying it. I mean, I think the lawsuits here are going to be so extraordinary. What if Binance finds out that the North Korean hack of $6 billion was using AI, possibly powered by NVIDIA chips, possibly secured or given access to by China who got these chips from MegaSpeed?

They could, if they can, if anyone can connect anything to AI potentially fronted by Chinese LLMs, they are going to have a case against the negligence of Jensen Huang. And to give you a sense for the market's reaction here in after-hours trading yesterday, the stock was off about $400 billion. Theoretically, Ms. Huang is worth more than Oracle. What do I mean by that? The company last night and after hours lost the value of Oracle.

And I think you're going to see them connect this. I think Democrats, when they get the gavel, if you will, are going to try and connect this to a total abandonment or negligence or careless disregard for our national security when one CEO of one of the most valuable companies in the world is throttling back defense systems for Ukraine, potentially without the president's knowledge. The president's pointing fingers at him. He's pointing fingers at the president. And that the president knew about this and didn't stop it.

So this is the biggest story. This is the biggest business story of the year. And what happened between, I think, so I said a few days ago, there's no way he gets out of this. And the board appeared to be supporting him initially. We talked about this. The board members, it's a group of fairly middling boards. They've been there an average of like 12, 15 years. One of the board members, just as an example, the CMO of NFL and hasn't worked since 2018, but since being on the board has made $80 million.

And the board announced a quote unquote independent council. And I've first off, independent council, independents doing a lot of work there. Because typically an independent council always comes back with a recommendation based on one thing: who's paying for the independent council? And this council was going to come back saying mistakes were made, but there's nothing that gets in the way of Jensen leading this company. I would bet in the last 72 hours, some people from our security apparatus have sat these board members down and started asking them questions and outlining scenarios here that could have taken place.

And then each of these board members called their own personal attorney. And the personal attorney of these board members said, unless you want to be charged with crimes or negligence against the state, you need to swiftly cauterize this. And then I think they did another meeting yesterday and they said, okay, he's out. But this is likely, I mean, if every, and I apologize for the words out here, but if every Fortune 1000 CEO had a Wonder Woman's golden lasso around them and had to fess up to any indiscretions romantically, 100 to 900 of them would be out the next day or would have to admit to it.

This is not about sleeping. This is not about infidelity. This is about national security. And this is just getting started what might have gone on here in the vulnerabilities. I think this is a very big deal. And I think it's going to have a lot of ramifications for the protocols around how these companies equip themselves. If all of a sudden it comes out that some Anthropic executives were potentially in any way having relationships with potential spies, that could shelve the IPO that's supposed to happen next week.

This is the tentacles of this are going to go everywhere. Any thoughts, Jess?

You call the CFO for a source of truth. They're usually the stabilizing force. It's a really good idea. The key term around all of this is the idolatry of innovators. The fact that famous hedge fund managers and most of Silicon Valley are saying, oh, humans going to be human, boys will be boys, we should get past this. He's only human. Oh my gosh, CEOs are fired for so much less than this. And again, it's the idolatry of the dollar. If you create trillions of dollars in shareholder value, according to Silicon Valley executives, you are no longer subject to the law, norms of national security, fidelity around your obligation to the country.

And then the flip side of that idolatry of innovators is the following: the ridiculous notion that all of AI, much less this company, is dependent upon one person who is clearly distracted and spending a lot of time in Southeast Asia. You cannot, greatness is in the agency of others. And a $5 trillion company is in the agency of a ton of incredibly competent people. There are probably a dozen outstanding potential CEOs walking the halls of NVIDIA.

We always like to believe we fall into this ridiculous notion that there are these Jesus-like figures that are singular. Oh, Steve Jobs, Apple is done when Steve Jobs is out. The creativity is gone. Oh, wait, Tim Cook has 15X'd the company. Oh, wait, Sergey Larry and Eric, the dream team. What will happen to Alphabet when they're gone? Oh, what's going to happen? It's going to quintuple its market cap. How will Microsoft ever survive without Bill Gates? Oh, it's not only survived, it's thrived.

So again, ridiculous excuses that we would or a different set of standards for someone because they've created shareholder value versus every other citizen or every other executive in history. And then this notion that there are these Jesus-like figures that are singular. So in some. This is only going to get worse in terms of national security. But I believe NVIDIA stock will likely be up at the end of the year. Because if you look at the stock right now, it's trading at where the average S&P company trades. And even if you take out 20% of the chips that supposedly potentially shouldn't have been sold to bad actors, this company is growing much faster, is much more profitable, and is got much broader moaths than, say, a Caterpillar or a Ford or a Procter and Gamble.

So this is going to be a very tumultuous 30, 60 days. But absolutely, the company can continue to thrive. And what's probably more important to the AI market is the Anthropic IPO that's coming up, because that'll give a signal on the demand side. If Anthropic's IPO goes well and these frontier LLMs continue to show that they're growing fast enough to provide them with the cheap capital to buy NVIDIA chips, that's more important than whether he was sleeping with five people.

The thing that's going to be unfurl here in a very weird way, in a very ugly way, is going to be all the scenarios around what potentially the nation or Jensen's recklessness has done in terms of diminishing, eroding, and really damaging national security. This will go down likely as the biggest national defense compromise breach, whatever you want to call it, in history.

They're just like us. They're incredibly talented people. It's such an insult to the team at NVIDIA. It's like you could have the most amazing quarterback ever. You could have, I don't know, whoever you think it is, Steve Young or Joe Montana or Joe Nimitz or Aaron Rodger, you know, who pick a Tom Brady, pick the quarterback of the, if he doesn't have an amazing line and amazing receivers and a running back to take pressure off of him, he goes 0 for 18. And to believe you can build a company like this with this design, supply chain, corporate development, sales, financial management, I mean, it's just ridiculous.

The overhang here, the thing that could screw it up is they might be subject to just a crazy amount of lawsuits. But the company itself, without Jensen, I mean, let me put it this way. He was clearly distracted. He was clearly, you know, he was clearly, you know, the most valuable company in the world got brought down by the, you know, kind of the, what I'll call the oldest, the oldest playbook in the world. So yeah, I would argue that this company, again, my prediction is the stock is up from here.

I don't think this has been such a cloud over the company. But again, I think the Anthropic IPO is going to say more about the AI market than what happens with Jensen.

But this stuff just grosses me out so much. And that they're just doing it all the time and with multiple people. And to these women who built these companies with them, like when you were a dork in school and they were your lab partner up until these, you know, trillion dollars worth of companies. My astrogen is mad about this development.

That's not to say there aren't a lot of philanthropic male billionaires, but it just seems like standard pattern recognition that the moment Melinda or McKenzie get their 20, 30, 60 billion, they start giving it away. And also, look, I, fidelity, and then we'll get some pushback on this. Fidelity is somewhat correlated to opportunity.

They didn't have a chance to go to St. Barts and party on a boat with women and have, I mean, all of us, not all of us, most of us want a period in our life where, quite frankly, we can have some, for lack of a better term, fun. And most of these guys never scratched that itch because they were captaining the math team. They stayed home from prom and they've been working nonstop. And Jensen met his wife in college.

And I like this story. He was, you know, if you look at pictures of Jensen in college, he wasn't exactly George Clooney. And he met someone and he said to her, I love this. He said, if you let me tutor you every Sunday, I promise you I'll get you straight A's. That's how they met. And this guy never had that chance. It doesn't excuse it. But what you find with these guys is they wake up one day and they put on a leather jacket and they're worth $180 billion. And all of a sudden, they're the sexiest man in the room.

And they have a chance to behave the way they wanted to behave when they were 19 or 22 and never got the chance to. But this is a story as old as time. But it's a story that plays out in high decibel volume in the valley because these guys never had a chance to kind of sow some oats, if you will. I mean, the dynamics here around chemistry and, you know, the male ego. But for this guy, I mean, people have been calling him a traitor.

I don't think this is a question of treason. It's just a question of how could you be this fucking stupid?

I thought maybe this is a giant security operation. He's been cooperating with our security apparatus. I think that is giving him and the Trump administration, as we learn more about this, too much credit. But again, I don't, I think the stuff around, the stuff around infidelity and his failings is not going to be the story here. The story is going to be just how serious this breach was. And also this is, notice how Trump hasn't said a lot in the last 48 hours.

Now I'm thinking, oh, these hearings are coming and they're not only going to be, they'll be about Jensen, but what they'll really be about is how this administration has shown no fidelity and no respect for the expertise, the commitment, the expense, and the sacrifice. Our defense department, our army, navy, air force, marines, our security apparatus have made over the last 80 years to try and make us more lethal and more safe and to ensure that our weapons systems had an advantage over the Chinese and the CCP.

They likely, I think what you're going to find is this was like maybe a decade of progress around our national security. We just gave up a decade potentially to the CCP. I think this is a.

I feel as if yesterday was the first L we took when I found out that we didn't have the votes, potentially because of some people who missed the vote. But I tuned in and I thought you and Aaron had an interesting take on the mechanics of what went down or specifically what did not go down yesterday. Can you summarize for us?

They get sworn in on the 3rd and then, you know, that is effectively the day one. But when you have Democratic social media accounts saying things like, impeach Hegseth now, and then your members or just some of them can't get back from a cocktail party, it is a bad look. Would it have changed things? No. Mike Johnson, so the Republicans were missing seven congresspeople. Mike Johnson has kept a vote open over 10 hours before. They would have just waited until everybody got back and it wouldn't have gone through.

And there's a very strong argument, which I would have made, and I am going to make because here I am, that the eight articles of impeachment that Massie brought were far too broad and that you should be doing this piece by piece. And that's essentially what's going to happen when the Democrats come in and control the committees. You will have the pieces showing up in different committees and they'll move forward on that basis. And Massie is going to pare back the articles of impeachment. Those are the quote unquote uncomfortable votes that he's going to force Republicans to take about the war in Iran, what happened in Venezuela, also what happened in the Caribbean Seas where we are just taking out fishing boats that weren't narco-terrorists, no matter how many times Secretary Hegseth tells you that that's what happened.

So that's in general my take. And I agree with you that it doesn't feel after you have this blue tsunami and that big promises are made about action and also accountability that you flub something like this. You know, Nancy Pelosi being on the West Coast, it's one thing. There's a congressman, Correa, who's actually ill and couldn't make it. But I think, you know, the imagery of Pat Ryan and, you know, Pat Ryan has a very particular set of feelings about Secretary Hegseth and obviously he served our country honorably as well.

But if you have him checking himself out of the hospital after back surgery to make sure he can get there to vote, it's not an excuse that you couldn't run fast enough or make it the mile and a half back to the house. And I think it's just an enormous unforced error and you need better answers from leadership. Not just Hakeem Jeffries, but Katherine Clark, the whip. This is your job. It's like it's the title for you. So I think that people should, you know, spread the love in terms of who you're pissed off about, pissed off at for what happened.

But he had faith that Mississippi could make progress. He had faith that one day everybody would have the right to vote. He had faith that a day like this was possible.

On Tuesday, use your vote and honor everyone who died for that right.

And Scott will be the leader who changes that. He'll reverse the brain drain. And I thought that was really important because we've kind of stopped talking about that at the beginning of the Trump administration when they were going after all of the universities. It was top of mind to everyone. You know, what's going to happen when all of these incredible academics stop setting up their labs here, right? Or we deport them back to, you know, adversarial countries. They're going back to China, they're going back to Iran, et cetera. So I love that she highlighted that. And she said, make this a place where mamas can be thrilled that their babies come back to.

So again, estrogen addition of Raging Moderates, that really spoke to me. And I hadn't heard that perspective necessarily, you know, what folks who are actually raising their kids feel about the fact that they wish that their kids, you know, go off to great schools and then stay away from this place. The fact that, you know, he won against Cindy Hyde Smith, who went to a segregation academy, whose kid went to a segregation academy, who's worn Confederate gear, called it the best of Mississippi history.

It speaks volumes about progress, about the civil rights movement, about the importance of investing in black leadership, of what is possible. And he was talking about the map and that if we continue to only focus on the places that we won before, maybe you got 51, 52 senators, but to ignore the South and where it is also a lot less expensive to play because that does matter in all of this, right? Like how much can you carpet the airwaves?

I'm overwhelmed. I think there are so many beautiful elements to this story and I think he's going to be sensational. I think he's going to, you know, stir shit up and bring a different way of thinking to Washington, also adding to the Millennial caucus. I mean, we got such an upgrade in the ages and the perspectives of these senators that are coming in. I'm so excited.

But not only did the black women organize, turn out, show up 99%, but then they didn't stop. And they've been working around the clock to ensure that every vote is counted and that Scott Caloum will be headed to Washington.

And Mom Donnie, for instance, has been doing this in New York City and saved a tremendous amount of money. So it's not just about putting everything back together the way that it was, but doing a proper Doge or a proper procedure for seeing where there is fat to cut, what is necessary, what will make us, you know, lean, mean, and effective.

Let him veto an ethics bill. Let him veto a stock trading bill. Let him veto raising minimum wage to $20 or $25 an hour federally. But basically signal this is what we're going to do. And the way I call it is the Democrats need to ensure that the ratio of ideas to indignance is hugely positive. And that is, I'm all for the late night C-span porn of dragging famous people's children in front of Congress and gents, you know, accountability.

Absolutely. But for every ounce of that, there needs to be a pound of how are we going to get people, help them get a mortgage, a job, and form a family. And if we go on a, what I'll call a nostalgia revenge tour, and that's what people think of as what we're primarily focused on instead of healthcare, instead of, you know, housing, this is how we have a red wave in two years. All right, let's move on here. Question two, Tusken Sall asks, do the national security issues raised here open up a conversation of the federal government potentially nationalizing the most sensitive and critical parts of NVIDIA?

I'll go first here, Jess. I don't think so. Generally speaking, you always want to have a bias towards the private sector running an industry. Now, it goes too far. The healthcare industry being totally privatized, prisons being privatized has resulted in externalities where we want to become the most incarcerated nation in the world. Check that box. We want to let healthcare companies verticalize so they can extract more and more money from consumers, such as people working in companies. Those businesses are now paying $23,000 a year.

We pay on average $13,000 per individual for healthcare versus $6,500. So there are absolutely, there needs to be government intervention in these companies, but it should be through regulation. What we need at a place like NVIDIA is defense and Department of Energy and CIA level security and protocols and screening and scrutiny and not WeWork level security. But to privatize NVIDIA and take away the profit motive and the innovation motive to a certain extent, you end up with Air France or DeLorean.

It just, no, it should be regulated. We should be more thoughtful about our defense considerations. But this is the kind of company you want to let cook in the private sector. Your thoughts, Jess?

And I hope that this does put to bed the conversation over whether these companies need some degree of regulation and oversight. I think everyone who was saying absolutely not, you know, let them cook with no guardrails has big egg on their face.

So maybe he should just be Mr. Mom. He's got four kids now. You know, go into the sunset.

I just don't even think we can begin to imagine the unintended consequences here. It's going to be just fascinating on an economic and markets and a political level. Anyways, let's leave it there, Jess. Thanks to everyone on Substack for tuning in. And Jess, I will see you. When are we next together? What day is it? Where am I?