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Yesterday, Nvidia confirmed what we all already knew.
The corporate is planning to acquire Hugging Face, a New York-based startup which has constructed a repository for open supply AI fashions and lately shot to world recognition after it got here underneath a cyberattack by rogue OpenAI fashions.
The value tag was a cool $12.9 billion, making Hugging Face Nvidia’s second-biggest buy, after it paid $20 billion for chipmaker Groq’s property.
That almost $13 billion valuation was what it took to fend off different bidders, Nvidia CEO Jensen Huang advised CNBC on Thursday.
So why did the world’s most precious firm splash the money for Hugging Face?
Jensen Huang, chief govt officer of Nvidia Corp., speaks to members of the media following the corporate’s “Japan AI Ecosystem” reception in Tokyo, Japan, on Thursday, July 16, 2026.
Kiyoshi Ota | Bloomberg | Getty Photos
‘Defensive transfer’
To grasp that, first we have to break down what Hugging Face truly does.
The startup has develop into maybe the main platform for constructing, sharing and operating AI fashions, notably within the open supply and weight ecosystem — which suggests builders can edit and self-host a mannequin.
Half of Nvidia’s enterprise, Huang stated, is “actually largely pushed by open fashions.” The chip big itself is an enormous developer of open fashions — with Huang telling CNBC on Thursday that the corporate was the biggest contributor of open fashions on this planet “by far.”
Hugging Face additionally sells infrastructure and collaboration instruments to organisations working with closed, proprietary AI — in addition to robot ducks.
The platform’s attain is in depth. Greater than 18 million individuals use the platform to share greater than 3 million fashions and 500,000 datasets, and it’s utilized by greater than 200,000 corporations, Nvidia stated in a press launch.
The startup has develop into “one of the necessary parcels of actual property within the AI market,” Gil Luria, head of know-how analysis at D.A. Davidson stated in a observe.
The closest corresponding to Hugging Face’s enterprise was GitHub, a software program repository that was acquired by Microsoft in 2018 for $7.5 billion, Luria stated.
One of many learnings from that transaction was that permitting a tech big to amass an “necessary repository places everyone else at a drawback,” Luria added, making Nvidia’s acquisition of Hugging Face a “defensive transfer”.
“If one of many large labs, or worse but Google, owned Hugging Face, it will be able to decelerate open supply AI within the U.S., which might enable the large labs to extend their energy,” he added.
Management
In brief, Hugging Face is the place AI builders hang around — and that is precisely the form of house Nvidia wish to management.
“Nvidia good points visibility into buyer’s preferences and the AI fashions they use,” Naveen Chhabra, principal analyst at Forrester, advised CNBC. “They’ll see which fashions are trending, what datasets prospects are downloading, and the architectures which might be gaining traction weeks earlier than they hit mainstream tech information.”
The acquisition is an extension of the corporate’s “technique to encourage a variety of AI fashions to prosper, together with each proprietary frontier fashions and open weight fashions,” Ian Fogg, analysis director at CCS Perception, advised CNBC.
The chip big has develop into one of many largest strategic backers of tech corporations on this planet because it’s constructed up fairness stakes throughout the AI stack, in addition to serving to to bankroll GPU purchases with more and more complicated monetary preparations.
Now it is appeared to safe one of many world’s main AI hubs outright — and it beat out different suitors within the course of.
Who have been they, I hear you ask? Huang wasn’t forthcoming on CNBC’s “Squawk Field.”
“It would not matter who the opposite bidders have been,” he advised CNBC. “It solely issues who wins.”
Information edit
Yet another factor
Because the U.S.-China AI race continues to collect steam — there’s growing scrutiny on American reliance on China for key parts used to energy knowledge facilities, elevating the prospect of upper prices and worsening provide chain shortages for the AI buildout
