Nvidia closes in on Hugging Face acquisition

Nvidia has agreed to buy Hugging Face for $12.9 billion, The Information reported Wednesday night, citing a source familiar with the matter. Business Insider, which first reported over the weekend that Hugging Face was fielding takeover interest, reported Wednesday night that the talks — which would value the company at more than $13 billion — had not yet produced a signed agreement and could still atomize. Hugging Face, founded in 2016, is one of the most popular hubs where developers share and download open-source AI models. Buying it would give Nvidia a strong foothold in the world of open-source AI, right as open-source developers are doing their level best to catch up to closed AI systems from companies like Anthropic and OpenAI. Most obviously, it comes down to protecting its dominance in AI chips, which, from the outside at least, appears increasingly at risk, even with Nvidia’s aggressive chip-release schedule. Pretty much all of the biggest closed-source AI labs (OpenAI, Google, Amazon, and Anthropic) are now in the process of building their own AI chips to lessen their reliance on Nvidia. A thriving ecosystem of open-source AI models gives customers more alternatives to those closed labs, which in turn keeps more of the market dependent on Nvidia's hardware. That’s also why Nvidia has already poured tens of billions of dollars into building its own open-source AI models. Hugging Face CEO Clem Delangue has spent much of this year publicly aligned with Nvidia's open-source push, amid a debate that has been building for months, as Washington officials reportedly weighed restrictions on open-weight models. In an appearance on CBS's "Face the Nation" earlier this month, for example, Delangue said Hugging Face used an Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack and pointed to a recent letter — signed by Nvidia CEO Jensen Huang and 24 other companies, including Hugging Face — urging the U.S. government to support open models rather than restrict them. In a separate CNBC interview in late July, Delangue made similar points, citing that same letter while warning that China is "clearly dominating" open-source AI. The deal would also mark something of a comeback for Nvidia in cloud computing. Nvidia reportedly scaled back its own cloud business, called DGX Cloud, about a year ago. But according to The Information, owning Hugging Face — which already helps developers run their AI models using rented computing power — could give Nvidia a way back into that market without starting from scratch. There’s also a financial safety net at play. Nvidia has promised to help cover the cost of tens of billions of dollars in cloud computing deals for its customers. If those customers end up not using all the computing power they signed up for, Nvidia could get stuck with it. Owning Hugging Face would give Nvidia the ability to sell that unused capacity to Hugging Face's customers.