Nvidia Acquires Hugging Face for $12.9bn in Major AI Deal

Nvidia buys Hugging Face for $12.9bn to expand beyond chips, vows to keep open-source AI platform open for developers worldwide.

Nvidia has officially sealed a $12.9 billion deal to buy Hugging Face, the world's most popular open-source artificial intelligence platform.

The move shows the chipmaker is pushing beyond hardware. It is now going deeper into the AI software stack.

The acquisition was confirmed on Thursday. Nvidia CEO Jensen Huang announced it in a blog post.

Huang said Hugging Face will remain what it is known for. An open platform for the entire AI ecosystem.

"Together, we will scale Hugging Face's platform, strengthen its infrastructure and expand access to AI for developers and institutions worldwide," Huang wrote.

The deal did not come out of the blue. The Information had reported last week that talks were advanced.

But the speed was surprising. Hugging Face CEO Clement Delangue told CNBC on Thursday that his team made the first move. They approached Huang over the summer.

"And a few weeks later, here we are," Delangue told Becky Quick on Squawk Box.

He said the company reached a turning point this summer. Open-source AI needed more muscle to grow.

"During the summer, I think we realized that Hugging Face and open-source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility," he said.

Delangue described Nvidia as "a perfect home" for Hugging Face. He said discussions moved very fast after that first contact.

This is now Nvidia's second biggest deal ever. It comes just after the $20 billion purchase of assets from chipmaker Groq in December.

Before Groq, its largest deal was the nearly $7 billion acquisition of Israeli chipmaker Mellanox in 2019.

The timing makes sense. Nvidia is today the world's most valuable company. Demand for its graphics processing units, GPUs, has powered the generative AI boom.

Buying Hugging Face is a clear bet. Obgist reports that Nvidia wants to show it is more than just a chip company.

Hugging Face itself has been in the news recently for a different reason. The platform was at the center of a hacking incident.

The attack raised fresh concerns about how fast powerful AI and cybersecurity tools are evolving.

Delangue, a strong voice for open-source models, blamed the breach on engineering mistakes. He said the team used an Nvidia version of a Chinese open model to fix it.

On Thursday, he told CNBC that the incident actually proved his point. It showed why open models matter.

He said the company now needs to "double down" on open-source AI.

Huang shares that view. He said open-source gives defenders an edge over attackers.

"When I say asymmetric capability, there are way more people who are protecting than there are people who are attacking," Huang explained.

"And so, the benefit of having the community come together with open models, so that they can collaborate all transparently with each other, gives the defenders an asymmetric advantage," he added.