Jensen Huang is out. What does that mean for Nvidia and the broader economy?

On Thursday, Nvidia CEO Jensen Huang stepped down. The move came after a weeklong scandal in which two extramarital affairs came to light.

“He pretty much had to go,” said Erik Gordon, a professor at the University of Michigan's Ross School of Business. “Too much of a distraction for a company, too much danger for the company, and, from my experience in advising boards of directors, my guess is that the boards have been meeting day and night, trying to figure out how to convince Jensen to step down. And they succeeded.”

Now that he’s out as CEO, shockwaves are being sent through the AI sector and the broader economy.

Chief Financial Officer Collette Kress will take over as interim CEO. She’s been with the company for 13 years, and she’ll be only the second person to lead Nvidia, which has been around since 1993. Jensen Huang has led the company since he founded it.

That’s part of why this is a big story. Nvidia has become a huge player in the booming buildout of AI infrastructure. Huang has not only been the public face of the company; he also had a huge amount of power in the firm.

“This is sort of like when Steve Jobs got pushed out of Apple. What happened to Apple? Well, it wasn't easy for them,” Gordon said. “They're going to need a new CEO. They're going to need somebody really fabulous, and it's not going to be easy to bring them in.”

The company had an unusual structure where Huang had 60 people reporting to him directly, and Nvidia reportedly never made a succession plan. The company’s board didn’t even have a chair until Thursday, when it announced it appointed Harvey C. Jones as its leader.

If Nvidia falters, it could have ripple effects on other AI companies.

Many of the big AI platforms — OpenAI, SpaceX, and others — rely on Nvidia’s chips. And Nvidia has invested in those companies and a bunch of other startups. A lot of the big AI players are financially tied to one another in various ways, so there’s the risk that problems could spread.

“The troubles at Nvidia are troubles for the entire AI industry. They are at the center of it,'“ Gordon said. “If there is some floundering around, if there's some time lost because of the transition, that's dangerous for all of the AI — and that's dangerous for all of us because AI companies have been such a big part of the investment economy.”

And if you have a retirement plan with stocks, chances are your money is likely tied into this sector too.

We should get a better sense of where the industry is headed next week, when Anthropic could go public. Nvidia will also report its third-quarter financial results on Tuesday — without Jensen Huang at the helm for the first time.