NVDA: Nvidia Buys Hugging Face for $13B in Open-Source Power Grab. It’s a Slam Dunk for Durant

The chipmaker just acquired the platform used by 18 million AI developers. Apparently, selling the picks and shovels wasn’t enough — Nvidia would also like the map.

🤗 Nvidia embraces Hugging Face

• Nvidia NVDA agreed to acquire Hugging Face for $12.9 billion, one of the chipmaker’s largest deals.
• Roughly $11.9 billion will go to investors, with another $1 billion in equity reserved to retain employees. Nvidia shares gained 1.8% after the announcement.
• Hugging Face operates a widely used platform where developers access, share and deploy open-source AI models, datasets and applications.

💻 GitHub of AI strikes a nice premium

• More than 18 million developers and 200,000 companies are on it, earning the business its shorthand description as the “GitHub of AI.”
• The price represents an enormous premium. Hugging Face was valued at $4.5 billion during its 2023 funding round and reportedly generates roughly $150 million in annual revenue.
• Nvidia is therefore paying about 86 times sales. Traditional valuation spreadsheets may wish to sit this acquisition out.

🧠 Chips meet the developer ecosystem

• Controlling a major destination for AI developers gives Nvidia visibility into which models and applications are gaining traction — while creating a natural pipeline toward its chips, software and cloud-computing services.
• Open models are increasingly challenging proprietary systems from OpenAI and Anthropic because developers can customize and deploy them more cheaply.
• Nvidia now gains exposure whichever approach wins: closed-model companies buy its hardware, while open-source developers build on a platform it owns.
• If Amazon, Google, Meta and Microsoft increasingly design their own chips, Nvidia can defend its position by owning more of the tools and infrastructure developers use around them.

🏀 Durant lands an early winner

• NBA superstar Kevin Durant and business partner Rich Kleiman reportedly invested $250,000 through Thirty Five Ventures — $100,000 in Hugging Face’s seed round in 2016 and $150,000 during Series A.
• Estimates suggest their stake could now be worth more than $60 million, although the ownership details and payout remain private.
• That would represent an estimated return above 24,000%. Durant may have made one of the best athlete investments on record by backing an AI startup before AI startups were a thing.
• Nvidia still faces a delicate trust problem. CEO Jensen Huang says Hugging Face will remain open and developers won’t be required to use Nvidia hardware.
• Preserving that neutrality is crucial: if users suspect the platform favors Nvidia over AMD, Google or alternative clouds, its greatest asset — the community — could begin looking elsewhere.