With $197 billion in current assets and nearly $60 billion in profits from its most recent quarter, Nvidia is on an artificial intelligence spending spree.
Just last month, Nvidia and six giant investment firms said they were raising $500 billion in financing so the chipmaker’s customers could pay for computing power. Then Nvidia agreed to pay as much as $105 billion to back one of the largest data centers in the world. Nvidia also said it would guarantee more data centers for other start-ups.
Now Nvidia is buying Hugging Face, a library of open A.I. models, for $12.9 billion, the companies announced on Thursday. Hugging Face, a 10-year-old start-up that raised more than $400 million in funding, said it was privately valued at $4.5 billion in 2023.
The acquisition is another sign of Nvidia’s growing role as Silicon Valley’s central banker, using its vast financial resources to bolster A.I. start-ups and funnel money to customers for its chips.
Nvidia has invested nearly $50 billion in A.I. labs making advanced models, said Colette Kress, Nvidia’s chief financial officer, during an earnings call with investors and analysts on Wednesday. She called the investments “a meaningful commitment” but “a small fraction of our expected free cash flow.”
There’s little question that Nvidia has the resources. Just three years ago, Nvidia’s quarterly profit was $6.2 billion, about a tenth of what it reported for its most recent quarter. The company also said revenue more than doubled from a year ago, to $96.22 billion.
But that growing roster of financing deals is raising concerns that the A.I. boom is being fueled through increasingly risky bets, with Nvidia at the center of many of them. Using unusual arrangements with chipmakers, cloud computing providers and governments, A.I. start-ups are gaining access to computing power that they could not afford by themselves, and to capital that lenders would not otherwise provide.
Many of these deals have drawn criticism for being circular. Some A.I. start-ups are receiving billions of dollars from tech giants before spending those billions with the same companies to pay for chips, cloud computing and other services.
In July, for example, Nvidia announced a partnership with Safe Superintelligence, a start-up created by a founder of OpenAI. The chipmaker made a multibillion-dollar investment in the start-up and provided computing power for its research. It struck a similar deal in March with Thinking Machines Lab, which was founded by a former executive at OpenAI.
The purchase of Hugging Face also shows how important open-source technology has become to Nvidia. Hugging Face is essentially an online library of open-source A.I. models, which can freely be downloaded and modified. It is widely used by technology developers.
Hugging Face, based in New York, became more widely known after A.I. agents created by OpenAI broke away from their developers and hacked into its network. Clément Delangue, the company’s chief executive, started a publicity campaign soon after the incident.
The acquisition marries two staunch supporters of open-source A.I. models. Nvidia and Hugging Face have argued that A.I. developers must be able to make open models so people can further develop technologies and build new businesses.
Both companies backed an industry letter stumping for open A.I. models last month, after Anthropic and OpenAI lobbied against the models and suggested that Chinese start-ups were stealing their technology to create competitive open alternatives.
Hugging Face was started in 2016, and its main product at the time was a chatbot app for teenagers. The start-up later became a repository for open-source A.I. and a destination for developers who want to customize A.I. tools.
As the A.I. boom took off, so did Hugging Face. In 2021, the year before OpenAI released its first chatbot and accelerated the A.I. race, Hugging Face hosted 13,590 open-source models, the company said. Today, it has nearly three million.
The post Nvidia Extends A.I. Spending Spree With $12.9 Billion Deal for Hugging Face appeared first on New York Times.
