The "key man risk"

Good morning,

The best highlight reel out of the NFL this weekend featured an unstoppable corgi that went rogue on the field. Some are calling him “the Barry Sanders of corgis.”

In today’s letter:

• Nvidia and the overlooked “key man risk”
• New: Top SaaS vendors on Ramp
• A concerning employment trend

The risk Nvidia didn’t list raises fears of AI turmoil

Some CEOs are so synonymous with their companies that the possibility of losing their leadership gets explicitly highlighted as a risk in their financial filings. For example:

• “We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer.” (Tesla’s 2025 10-K)
• “If Mr. Zuckerberg were to become unavailable for any reason, there could be a material adverse impact on our operations.” (Meta’s latest 10-Q)

Nvidia's filings contain several pages of risk factors, from financial commitments to regulations and export controls. But nowhere in its current risk factors does it explicitly list its reliance on CEO and co-founder Jensen Huang.

That “key person” risk has now come under the spotlight after the Nvidia CEO admitted to having an affair, days after major news outlets linked him to a woman whom U.S. intelligence officials reportedly determined to be a Chinese spy. In an email to Nvidia employees, Huang revealed that the company had opened an independent investigation “regarding the national security concerns raised in news reports.”

• The suspected spy, Alice Huang, is a former or current executive (unclear) at Singapore-based data center firm Megaspeed. Sources briefed on the U.S. intelligence told the New York Times they believe Alice Huang was recruited to glean information about American AI chips and push for Nvidia’s advanced GPUs to be allowed to be exported to China.

Nvidia shares sank as much as 8% yesterday while the broader Nasdaq 100 gained 3.4%. The company’s board said on Sunday that it has no reason to believe trade secrets or national security were compromised. “Jensen is committed to continuing to lead NVIDIA as CEO without interruption,” a spokesperson said. Still, investors are on edge.

• Nvidia is a foundation on which the AI industry is built. It’s entrenched across almost every aspect, from the infrastructure powering the tech to its hundreds of billions in financial commitments to suppliers and operators.
• Jensen Huang is the famous face of the $4.3 trillion company, with no clear successor. Investors fear that Huang could be forced to step down if the probe reveals more concerning findings. This could affect not just Nvidia, but the entire tech industry and the market at large.

The bottom line:

The “key person risk” is intangible, but real — and not just for Nvidia. We talk a lot about AI industry risks like overspending and off-balance-sheet debt. The key person risk is often overlooked: it’s less directly measurable than ballooning capex or new tariffs, but it’s there. Other companies with prominent key person risks include: Tesla and SpaceX (Elon Musk), Meta (Mark Zuckerberg), and OpenAI (Sam Altman).

AI dictation apps get loud in the charts

Ever seen one of your colleagues talking to themselves in a cubicle, whispering sweet nothings to their laptop? They’re probably chatting with AI.

Ramp Economist Ara Kharazian breaks down three underrated movements in AI and software adoption, including the AI dictation race:

• This summer, Wispr Flow, the AI dictation app, launched its own AI notetaker, a direct competitor to Granola.
• Meanwhile, Granola recently launched a dictation feature, a direct competitor to Wispr Flow. Both added customers and grew their adoption rates this month, landing at positions 6 and 9 on our fastest growing software vendors list.

See the other unexpected software trends.

Term Sheet: “Long-term unemployed”

On the surface, the latest jobs report was extremely encouraging. The U.S. economy added 165K jobs in October, nearly three times more than what Wall Street expected. Unemployment ticked down to 4.1%, and worker pay rose by 0.4%.

But a disturbing trend is lurking beneath the surface of these strong numbers.

• The ranks of the “long-term unemployed,” which the BLS defines as Americans that haven’t had a job for 27 weeks or more, are rising.
• The average duration of unemployment rose to 27.1 weeks (nearly seven months), the highest in a decade, excluding the pandemic.

As of October, nearly 2M Americans were long-term unemployed, accounting for 27.6% of all unemployed workers.

Regular unemployment benefits typically end after 26 weeks in most states, meaning that most long-term unemployed Americans have maxed out their government benefits.

Signals Shortlist

• Google will turn off search for schools that reject its AI tools (The New York Times)
• Boeing to cut 5% of commercial jet workforce amid production struggles (Reuters)
• Small retailers brace for ‘huge hit’ this holiday season as shipping costs spike (CNBC)
• Musk says Tesla on the hook for deposits after Cybertruck cancellation (Yahoo Finance)

🗓️ Leading Events:

Tuesday, November 10: Consumer Price Index for October. Earnings expected from CoreWeave, Rigetti Computing, D-Wave Quantum, and Wix

Wednesday, November 11: Banks closed in honor of Veterans Day

Thursday, November 12: Earnings expected from Cisco, Cerebras, and Applied Materials

Friday, November 13: Producer Price Index

🤝 Like what you read? Share Leading Indicators with a friend.