Hugging Face, which hosts and provides access to open-source AI models and data sets, said it was forced to use an open-source Chinese model to defend itself from the OpenAI hack because of restrictions on how popular closed models could be used.
The company has also been at the center of an industry debate over whether access to advanced AI technology should be available openly or whether it should be “closed,” like popular models from OpenAI and Anthropic, and restricted to prevent misuse.
Unlike closed models, open-source AI models such as those hosted on Hugging Face allow companies and developers to download the parameters that determine how a model functions and customize them for specific purposes.
By downloading and running the models on their own infrastructure, some believe customers can also better protect proprietary or sensitive data.
Against that backdrop, Nvidia CEO Jensen Huang has spoken in support of open models, arguing they can improve safety and accelerate innovation.
The acquisition could also support Nvidia’s efforts to secure its role as the technology backbone of the AI boom.
Huang said in a blog post on Thursday that acquiring Hugging Face would allow Nvidia to expand access to the platform’s models to more developers and companies around the world.
Hugging Face has more than 18 million developers and researchers using more than 3 million models, as well as 200,000 enterprise customers.
Nvidia itself released more than 500 open models on Hugging Face before the deal.
“To the millions of builders on Hugging Face: thank you for pushing the boundaries of what is possible,” Huang said in a blog post, reiterating Nvidia’s plan to keep the platform open.
“Together, we will make AI more open, more capable and more accessible to people and institutions around the world.”
Meanwhile, the chipmaker last week said its sales more than doubled in the most recent quarter to more than $96 billion.
Investors, however, continue to question whether the spending spree on AI infrastructure will continue and whether Nvidia can stay ahead of a growing slate of competitors.
Nvidia has made major investments to support and expand the AI ecosystem, including investments in AI labs and lending money to customers who buy its chips to build data centers.
Under the deal announced Thursday, Nvidia will pay $11.9 billion to Hugging Face shareholders.
The agreement also includes an additional $1 billion in equity to retain Hugging Face employees joining Nvidia.
The acquisition is expected to close in the first half of next year, according to a securities filing.
The agreement marks a significant increase from Hugging Face’s $4.5 billion valuation in 2023, following a $235 million funding round.
Hugging Face turned down a $500 million investment from Nvidia last year that would have valued it at $7 billion, seeking to maintain its independence, according to a report from the Financial Times.
But Hugging Face CEO Clem Delangue said in an interview with CNBC on Thursday that he pursued the deal with Nvidia over the summer after realizing that open-source AI was at a “turning point and that it needed more resources, more scale, more visibility.”