During the company’s most recent earnings call, held last week, Huang dedicated most of his remarks to talking up Nvidia’s strong position in open-weight models, stressing that he thinks prudent businesses will ultimately prefer to build their own AI, using open-weight models as the starting point. “Every major company and surely every country and every startup needs to build their domain specific, their proprietary AI, their proprietary alpha,” he said. “And the open models reaching frontier levels has made it possible, has enabled them to all do that.”

In that context, buying Hugging Face is highly complementary to Nvidia’s investments in neoclouds such as CoreWeave Inc and Nebius Group NV. These now make sense beyond a circular financing vehicle to juice Nvidia chip sales. “We think more open-model workloads will seek private, dedicated and sovereign hosting outside hyperscaler bundles,” remarked Bloomberg Intelligence’s Vasu Kasibhotla, “which will reinforce neoclouds as AI’s neutral compute layer.”

The key term is “neutral” – the potential corrosion of which poses the biggest risk to the Hugging Face acquisition. The site, named after an emoji, became what it is today – a repository for more than 3 million open AI models – because of its independence from any of the main players, even as some of them became investors. As rumours of this week’s deal emerged, users raised concerns that Nvidia will use Hugging Face to funnel users aggressively to Nvidia models and infrastructure. Huang has insisted that won’t be the case. “Developers will choose the models they want, the frameworks they want, the clouds and inference service providers they want and the computing platforms they want,” he wrote in a blog post announcing the acquisition. “Nvidia compute will not be required to build on or deploy through Hugging Face.”

Parallels will inevitably be drawn, however, to Microsoft Corp’s 2018 acquisition of coding repository GitHub. Initially, developers praised Microsoft’s hands-off approach, but as the AI era beckoned, the company moved quickly to train its models on code hosted on GitHub, infuriating some developers. Later, it used GitHub as a marketing channel for its own AI coding tools.

Nvidia’s handling of Hugging Face will need to be delicate, lest it spoil the community that made the acquisition worthwhile. For now, investors clearly see the Hugging Face bet as a smart move. Nvidia shares were up 1.5% this week on news of the deal’s confirmation. That’s not eye-catching until you consider that’s a more than US$80b ($136b) jump in market capitalisation for a company that booked a US$54b profit in the last quarter alone. That makes US$13b small change for a big impact. The Hugging Face deal is a no-brainer and will likely be seen as a pivotal strategic move for years to come.

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