The final day of the Web Summit in Lisbon, one of Europe's largest tech gatherings, was dominated by the sudden departure of Jensen Huang as chief executive of Nvidia, the chipmaker at the heart of the artificial intelligence boom. Alongside that shock, a panel of economists and market analysts warned that public debt markets could spark the next financial crisis, and that the AI rally may be built on fragile foundations.
The conference, held at the MEO Arena, had to squeeze a full programme into Thursday after Wednesday's sessions were cancelled on the advice of the Portuguese government, which had declared a state of emergency ahead of Storm Charles. In the end, the storm largely spared Lisbon, bringing only heavy rain and minor flooding.
Huang's exit: a blow to investor confidence
Huang stepped down on Thursday following reports of two extramarital affairs. US intelligence reportedly suspects that one of the women involved may have been spying for China, a claim Beijing has rejected. Chief financial officer Colette Kress has been named interim CEO while the board searches for a permanent successor.
The news hit Nvidia's stock hard, with shares dropping around 15% at the open before paring losses to trade down about 5% at roughly $164 per share. That represents a decline of more than 30% from the all-time high of $243 reached on 5 October. The turmoil has raised questions about the company's future and the broader AI sector's stability.
Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, a capital markets publication with millions of followers, argued that Huang should not have resigned. He described the departure as "a net negative for investors" over the next couple of years, though he remained bullish on Nvidia's long-term prospects. Kobeissi also said he did not expect Huang's exit to affect the upcoming stock market debut of Anthropic, the AI firm behind the Claude models, which is seeking a valuation of up to $1.4 trillion (€1.25tn). Nvidia is among seven tech companies that have agreed to buy Anthropic shares at the offer price.
AI, China, and the debt threat
Economist James Galbraith, a professor at the University of Texas at Austin, offered a more cautious view. He suggested that Chinese technology could eventually undercut Nvidia's dominance, which would raise serious questions about the hundreds of billions of dollars that Microsoft, Alphabet, Amazon, Meta, and other hyperscalers are pouring into AI infrastructure.
Galbraith framed the global economy as a contest between two systems. The United States, he said, makes it easy to raise private money quickly but is slower to set policy and take decisions. China, by contrast, can centralise research, technological development, and deployment, and intervene more directly in its economy. For those reasons, he said he "would tentatively bet on China" to win the AI race, and perhaps to become the world's largest economy over the next few decades.
Beyond the AI boom, the panel turned to public debt markets as a major concern. Kobeissi warned that one in five dollars spent by the US government goes towards paying interest on the debt, "not even to pay down the debt." US Treasury data shows Washington spent $1.1 trillion (€988bn) on net interest in the fiscal year to September, or 19% of its revenue.
"US debt to GDP ratio is at World War II levels and there has not been a technical recession since the COVID-19 pandemic," Kobeissi said, adding that "the debt market has been screaming that it will be in a higher for longer environment in the foreseeable future," meaning interest rates are set to stay high. He warned that "on the current path the US is on, there is a 100% chance of bankruptcy," and that central banks cannot bring down interest rates in the current environment.
Still, Kobeissi stressed that "we are not in an imminent 2008 situation but the trends 10 or 20 years out are very concerning." He described himself as "a huge bull" on the US, citing its resilient economy and accelerating innovation.
Galbraith recalled how, during the COVID-19 pandemic, US President Donald Trump and a Democratic-controlled House agreed on relief to rescue the markets, but warned that the same cohesion might be lacking now. In last week's US midterm elections, Democrats won 255 House seats to the Republicans' 169, according to AP's count as of the time of writing. Several states are still tabulating ballots, and Democrats could still flip the Alaska Senate seat and multiple of the 16 uncalled House seats.
The Web Summit's final day also saw discussions on Europe's role in the AI race, with some speakers noting that the continent risks being left behind as the US and China dominate the sector. The week of diplomacy in Europe, including the Dublin summit and Abu Dhabi talks, was a reminder of the continent's efforts to shape global tech policy.
As the conference drew to a close, the mood was a mix of excitement and anxiety. The AI boom has brought unprecedented investment and innovation, but the events of the past few days have underscored how fragile that momentum can be. For European investors and policymakers, the lessons from Lisbon are clear: the next financial crisis may not come from the usual suspects, but from the very markets that have fueled the current growth.
