Nvidia-Hugging Face deal: Chip giant to buy AI platform for $12.93 billion

Semiconductor giant Nvidia has announced that it’ll buy open-source artificial intelligence platform Hugging Face for $12.93 billion, as the chipmaker explores options beyond hardware and asserts that support for open AI models will drive future demand.

Shares of Nvidia rose slightly after news of the deal broke on Thursday. Nvidia CEO Jensen Huang wrote in a blog post that with the deal, Hugging Face will “remain an open platform for the entire AI ecosystem.” The CEO further said, “Together, we will scale Hugging Face’s platform, strengthen its infrastructure and expand access to AI for developers and institutions worldwide.” The deal is being seen as a breakthrough for Nvidia as it is poised to catapult the chip maker as a central player in the market for open models that users can freely download, run, and customize.

It is contrary to its competitors, including OpenAI and Anthropic, which have closed systems, Reuters reported. In an interview with CNBC on Thursday, Hugging Face CEO Clément Delangue said that he approached Nvidia CEO Huang in the summer with a deal, “and a few weeks later, here we are.” “During the summer, I think we realized that Hugging Face and open-source AI in general were at the turning point, and that it needed more, more resources, more scale, more visibility,” Delangue told CNBC on “Squawk Box.” Founded in 2016, Hugging Face became popular among developers and researchers, who could find, share, and test AI models and tools.

The online platform was in the news recently after rogue AI agents that escaped a testing environment appeared on its platform, which raised eyebrows in the industry about oversight and AI safety, BBC reported. Nvidia, whose market valuation has reportedly crossed $5 trillion, deals with manufacturing chips to train and run Artificial Intelligence systems.

In recent times, demand for these chips has skyrocketed as companies race to build AI products.