Nvidia to buy Hugging Face for $13b in big bet on open AI models

Nvidia has already played an active role in backing ​the open AI industry with its widely used Nemotron model.

Acquiring Hugging Face will give it direct access to a ⁠platform developers use to collaborate, test and share tools using various open AI models, potentially providing valuable insight and data to help it narrow the technology ​gap with top US and Chinese labs.

Demand for open-weight models has surged from businesses balking at the steep bill of deploying the technology, with Chinese ​companies such as Deep. Seek and Z.ai emerging as crucial players with models that can match the best from the US in tasks, including generating computer code at a lower cost.

Read More:Abu Dhabi AI institute releases fully open-source models with training data, code. That surge has fueled fears that some American firms could become reliant on Beijing's models as both countries race to dominate a technology they see as crucial to ​their future.

"Hugging Face will remain an open platform for the entire AI ecosystem," Nvidia CEO Jensen Huang said, adding that his company's chips ​would not be required to build on or deploy through Hugging Face.

Under the deal, Nvidia will pay about $11.9 billion to Hugging Face investors, while offering an ‌equity-based retention ⁠program of up to $1 billion for employees who join Nvidia. The two companies already work together to help developers use Nvidia's computing services on the platform.

Balance sheet strength. Hugging Face was valued at $4.5 billion in its in August 2023, when it raised $235 million from investors such as Salesforce , AMD  and Amazon . Nvidia, meanwhile, exited its July quarter with $22.44 billion in cash and cash equivalents, more than double January's $10.61 billion, giving the chipmaker substantial ​capacity to fund the deal.

That financial ​strength reflects a rapidly expanding ⁠business. Late last month, Nvidia issued arare year-ahead outlook, forecasting revenue growth of about 70% in fiscal 2028 as the AI infrastructure boom rages on.

But the chipmaker's use of its balance sheet has also drawn scrutiny. ​Deals such as its agreement to guaranteeup to $105 billionfor OpenAI's Ohio data-center lease have intensified investor ​concerns that Nvidia ⁠is supporting the demand driving its growth.

For Nvidia, building up open source may help it cushion a demand slowdown from customers such as Meta , OpenAI and Microsoft , which are developing their own AI chips to cut reliance on its costly and supply-constrained processors. Hugging Face has also been in the news ⁠recently after ​a hack by rogue AI agents that escaped OpenAI's testing environment.

Beyond hosting AI ​models, it offers datasets, software libraries and cloud services used to build and deploy AI applications. The New York-based startup was founded in 2016 by French entrepreneurs Clément Delangue, Julien Chaumond ​and Thomas Wolf.