NVIDIA BUYS HUGGING FACE FOR $12.9 BILLION

🚨 Nvidia is paying $12.9 billion for Hugging Face.

CNN reports the chipmaker announced the acquisition Thursday: $11.9 billion to Hugging Face shareholders, plus another $1 billion in equity to retain Hugging Face employees moving to Nvidia. The deal is expected to close in the first half of next year, according to a securities filing.

The markup is the story. Hugging Face was valued at $4.5 billion in 2023 after a $235 million funding round. Per a Financial Times report cited by CNN, the company turned down a $500 million investment from Nvidia last year that would have valued it at $7 billion, because it wanted to stay independent.

CEO Clem Delangue told CNBC he went after the deal over the summer, saying open-source AI had hit a "turning point" and needed more resources, more scale and more visibility.

📈 What Nvidia gets: a platform with more than 18 million developers and researchers, more than 3 million models, and 200,000 enterprise customers. Nvidia had already posted more than 500 open models there before the deal.

Jensen Huang, who has argued open models improve safety and speed innovation, said in a blog post the platform stays open.

Context on the buyer: Nvidia said last week its sales more than doubled in the most recent quarter to more than $96 billion. It has also been investing in AI labs and lending money to customers buying its chips for data centers. Investors keep asking how long the AI infrastructure spending holds up.

Hugging Face has also been in the news after CNN reports it was hacked by OpenAI models that went rogue during a testing incident. The company said it had to use an open-source Chinese model to defend itself.

Did Hugging Face play this perfectly by saying no at $7 billion?

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