Deal talks began after Hugging Face, an open-source AI platform that developers use to collaborate, test and share tools, received acquisition interest from another suitor, according to The Information. Business Insider separately reported that Nvidia had been “in talks” to acquire Hugging Face, and that the AI platform has been working with a bank to evaluate bidders’ interest in the startup, citing people familiar with the matter. CNBC could not independently verify the report, and both Hugging Face and Nvidia did not immediately respond to requests for comment.

The timing of the reported acquisition proves notable, as it came just hours after Nvidia delivered blockbuster earnings Wednesday that prompted shares to rise 4% in after-hours trading. Business Insider noted that while talks would value the company at more than $13 billion, the discussions had not yet produced a signed agreement and could still atomize. Nvidia’s silence on the matter carries particular weight, as the company has moved quickly in the past to address reports it considers inaccurate.

Strategic Expansion Into Open-Source AI Ecosystem

If completed, the acquisition would mark a strategic expansion for Nvidia into the open-source AI landscape at a critical moment in the industry’s evolution. Hugging Face, founded in 2016, operates as one of the most popular hubs where developers share and download open-source AI models, and the platform has become especially notable for its massive library of machine learning models and community features. Buying it would give Nvidia a strong foothold in the world of open-source AI, right as open-source developers work to catch up to closed AI systems from companies like Anthropic and OpenAI.

Siddy Jobe, a fund manager at Eonopolis Exponential Technologies funds, told CNBC’s “Squawk Box Europe” Thursday that it made sense for Nvidia to target a company like Hugging Face, as Nvidia has made it clear that it does not discriminate between closed and open-source models. “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 explained, adding that there is a five-layer cake from Nvidia, and foundational models represent one of them.

“It is clear that Nvidia wants to be integrated in the entire stack vertically, going from energy to foundational models and also to applications,” Jobe said.

Protecting Chip Dominance Through Open-Source Strategy

The acquisition strategy most obviously comes down to protecting Nvidia’s dominance in AI chips, which appears increasingly at risk from the outside, even with Nvidia’s aggressive chip-release schedule. Pretty much all of the biggest closed-source AI labs-OpenAI, Google, Amazon, and Anthropic-now work to build their own AI chips to lessen their reliance on Nvidia. A thriving ecosystem of open-source AI models gives customers more alternatives to those closed labs, which in turn keeps more of the market dependent on Nvidia’s hardware.

That strategic imperative explains why Nvidia has already poured tens of billions of dollars into building its own open-source AI models. The deal would mark the latest in Nvidia’s spree of acquisitions in the AI sector, with the company having acquired foundation model startup Kumo in June. Nvidia had also acquired ShedMD, Illumex, and Groq over the past 12 months, including a $20 billion licensing deal with AI chip startup Groq.

CEO’s Public Alignment With Nvidia’s Vision

Observers should not be surprised that Hugging Face’s days as an independent outfit appear numbered, given recent public positioning by its leadership. Hugging Face CEO Clément Delangue, a proponent of open-source models, has spent much of this year publicly aligned with Nvidia’s open-source push, amid a debate that has been building for months as Washington officials reportedly weighed restrictions on open-weight models. Chinese labs like Moonshot AI had released systems-like its Kimi K3 model-that matched leading U.S. models on benchmarks while costing significantly less to run, and talk of competitive and national-security concerns grew in Washington as a result.

Some critics of closed labs, like White House advisor David Sacks, suggested those fears were being fanned by the “duopoly” of Anthropic and OpenAI. In an appearance on CBS’s “Face the Nation” earlier this year, Delangue positioned his company firmly in the open-source camp, a stance that aligns seamlessly with Nvidia’s strategic interests in maintaining a competitive alternative to closed AI systems.

Recent Security Incident Highlights Platform Risks

Hugging Face was recently at the center of a hacking incident that raised concerns about the rapid evolution of powerful AI and cybersecurity tools. Delangue blamed engineering mistakes for the recent attack on Hugging Face and said his company used an Nvidia version of a Chinese open model to resolve it. He told CNBC earlier this month that “AI cybersecurity is going to become a huge market in the U.S. and in the world,” adding that “in this market, probably open models will be kings.”

The company has ramped up its investments in the AI sector, and Nvidia announced Wednesday it had $18 billion committed to equity investments for the remainder of the year. This aggressive investment strategy underscores Nvidia’s determination to maintain its position across the entire AI value chain, from hardware through software to foundational models and applications.

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