Huang's exit, AI bubble and financial crisis fears in focus on Web Summit's last day

On the final day of the Web Summit in Lisbon, several key issues dominated the conversation, including Jensen Huang's sudden departure as CEO of Nvidia, the risk of an AI bubble, and fears of a financial crisis due to mounting US debt. The conference, one of Europe's largest tech gatherings, saw speakers warn that public debt markets could trigger another financial crisis.

Panelists included Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, and economist James Galbraith, a professor at the University of Texas at Austin. The storm that had caused the postponement of Wednesday's sessions did not materialize, leaving the city of Lisbon with heavy rain and minor flooding.

Huang stepped down from his position due to revelations of two extramarital affairs. One of the women, reportedly being spied on by China, claims have been rejected by Beijing. Colette Kress, Nvidia's CFO, is now serving as interim CEO while the board searches for a permanent successor. Nvidia's stock experienced a drop of around 15% at the opening bell but has since recovered, down about 5% on the day, trading at approximately $164 per share.

Kobeissi believes Huang's departure will be a net negative for investors over the next couple of years, although he remains bullish on Nvidia's long-term prospects. He did not expect the exit to impact Anthropic, an AI firm seeking a valuation of up to $1.4 trillion, which is set to debut on the stock market next week. Nvidia is among seven tech companies agreeing to buy Anthropic shares at an offer price.

Professor Galbraith raised concerns about China potentially undercutting Nvidia's dominance in AI. He posited that the global economy is a contest between two systems - the US and China. The US excels in raising private capital quickly but is slower in policy-making, while China centralizes technology development and intervention. Galbraith cautiously bet on China to win the AI race and possibly become the world's largest economy in the next few decades.

The panel also highlighted the growing concerns around US public debt. Kobeissi noted that one in five dollars spent by the US government goes towards interest payments, not to reduce the debt. The US debt-to-GDP ratio has reached World War II levels, and there hasn't been a technical recession since the COVID-19 pandemic. Kobeissi warned that the debt market expects higher interest rates in the foreseeable future, implying a higher chance of US bankruptcy in the long run.

Galbraith cautioned that while there's no imminent 2008 situation, trends over the next 10 to 20 years are very concerning.