Nvidia’s $12.93 billion Hugging Face acquisition validates open weight models

Nvidia said it will buy Hugging Face in a deal valued at $12.93 billion. Nvidia said the deal is to expand its developer ecosystem and improve Hugging Face's infrastructure. The reality is that Nvidia sees Hugging Face as a way to solidify itself as a platform play for open weight models.

It's also quite possible that Nvidia's purchase of Hugging Face is a nod to the reality of playing the long game. Nvidia's Hugging Face purchase may be an acknowledgement that the enterprise needs a broad selection of open models to tune to broaden the AI market beyond frontier labs.

Nvidia CEO Jensen Huang said in a blog post:

"Hugging Face will remain an open platform for the entire AI ecosystem. Developers will choose the models they want, the frameworks they want, the clouds and inference service providers they want and the computing platforms they want. NVIDIA compute will not be required to build on or deploy through Hugging Face.

Hugging Face will continue to support open source and open weight models from across the ecosystem, from every model builder. It will continue to support multi-cloud and multi-accelerator development and deployment, so builders can use the hardware and infrastructure that best fit their work."

CEO Jensen Huang outlined the importance of open weight models on the company's earnings call:

"The world will need both closed models and open models. And both closed models and open models are skyrocketing in use. Open models are doing incredibly well. Closed models, we know are doing incredibly well," said Huang. "Every major company, every country and every startup needs to build their domain specific, their proprietary AI, their proprietary alpha. And the open models reaching frontier levels has made it possible, has enabled them to all do that."

Nvidia wasn’t going to directly compete with its customer base, but sees open models as a key part of the AI market. Nvidia is also likely to use Hugging Face as a GitHub-ish play for AI. Nvidia is already the largest contributor of open models and data to Hugging Face with more than 500 models and 250 open data sets. Hugging Face is a vertical integration play for Nvidia.

Is Hugging Face worth $12.93 billion? Probably not, but the valuation does reflect AI inflation. Consider that Nvidia bought Mellanox Technologies for $6.9 billion in a move that was way more strategic.