Nvidia agrees to buy AI platform Hugging Face for $12.9 billion

For context, the transaction discussions began after Hugging Face, a platform employed by developers to collaborate on and share AI tools, received acquisition interest from another suitor, according to The Information.

Key points

• Net income more than doubled to $53.95 billion, or $2.22 per share, from $24.76 billion, or $1.87 per share, a year earlier.
• Chief Financial Officer Colette Kress remarked on a call with analysts that Nvidia expects fiscal 2028 revenue expansion of 70%, above analysts' forecast of 44%.
• Siddy Jobe, a fund manager at Eonopolis Exponential Technologies funds, remarked the move aligns with Nvidia's strategy.
• Hugging Face was lately targeted in a hacking incident that triggered concern concerning AI security.
• The company's chips remain essential for building advanced AI models, and Nvidia has increasingly provided financial backing to backing new AI data centers.

If completed, the acquisition would place one of the most widely applied repositories for open-source AI models under Nvidia's ownership, expanding the chipmaker's reach further into the software and AI model ecosystem.

Nvidia, whose shares rose 4% in after-hours trading Wednesday after its quarterly earnings report, has produced a number of deals previously year, including a $20 billion licensing agreement with AI chip startup Groq.

Siddy Jobe, a fund manager at Eonopolis Exponential Technologies funds, remarked the move aligns with Nvidia's strategy. "I think Nvidia is very much a community, a platform-based company, and in that respect, I think Hugging Face fits perfectly within that, " Jobe informed CNBC's "Squawk Box Europe" on Thursday. He continued that Nvidia seeks to integrate throughout the entire AI stack, "going from energy to foundational models and also to applications."

Hugging Face was lately targeted in a hacking incident that triggered concern concerning AI security. CEO Clément Delangue attributed the attack to engineering mistakes and remarked his business applied an Nvidia version of a Chinese open model to resolve it. Delangue informed CNBC earlier this month that "AI cybersecurity is going to become a huge market" and that "open models will be kings" in that space.

In practice, the acquisition news follows Nvidia's better-than-expected fiscal second-quarter results. The firm noted adjusted earnings of $2.22 per share on revenue of $96.22 billion, topping analyst estimates of $2.10 per share and $92.17 billion, according to LSEG.

Chief Financial Officer Colette Kress remarked on a call with analysts that Nvidia expects fiscal 2028 revenue expansion of 70%, above analysts' forecast of 44%. According to She remarked customer forecasts "point to our growth doubling next year" but, guidance reflects supply constraints.

Almost four years after the launch of OpenAI's ChatGPT, Nvidia continues to see robust expansion, with revenue more than doubling from $46.7 billion in the same quarter last year. The company's chips remain essential for building advanced AI models, and Nvidia has increasingly provided financial backing to backing new AI data centers.

After a three-year rally, investor enthusiasm has tempered this year, nevertheless. Shares have risen regarding 13% as of Wednesday's close, slightly outperforming the Nasdaq. While rising memory costs, driven by a global shortage, persist as a challenge, nvidia faces growing competition from Advanced Micro Devices, Google and others.

For now, nvidia agrees to buy AI platform Hugging Face for $12.9 billion remains the part of the story worth watching, and further updates are likely as more details are confirmed.