NVIDIA Embraces Hugging Face & Victoria’s Secret Struggles

**SPEAKER_1** (0:00)
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**Hanna Horvath** (0:31)
Victoria's Secret is bringing Sexy back, but maybe not fast enough.

**Dylan Lewis** (0:35)
And Campbell's wants consumers to start craving snacks again.

**Hanna Horvath** (0:38)
For Thursday, September 3rd, it's Brew Markets Daily. I'm Hanna Horvath.

**Dylan Lewis** (0:41)
And I'm Dylan Lewis. Let's get moving and grooving.

**Hanna Horvath** (0:52)
Let's get into the first story of the day, and no surprise, it's a move from Nvidia. The company looked at its position at the center of the AI boom and decided it would like to be even more in the center. The company announced this morning that it's buying Hugging Face for nearly $13 billion.
And if you don't spend your free time hanging around AI developers, which I assume many of you do not, Hugging Face is sometimes described as the GitHub of AI. Basically, it's a giant online hub where developers can find, share, test, and build on AI models. And it is big. Hugging Face has more than 18 million users, more than 3 million AI models on its platform, and it's used by more than 200,000 companies. So this is not some small, buzzy AI startup Nvidia is buying. It is a massive community of people who are actively building this technology.
The move is pretty strategic on Nvidia's part, since they already dominate the hardware side of AI, selling their GPUs that power a huge chunk of this build out. But increasingly, Nvidia wants to be more than just the company that is selling you those chips. It also wants its software, its tools, and its technology woven through the entire process of building with AI. So buying Hugging Face would give it a much bigger role in the software and the developer side. So Dylan, I was just calling Hugging Face the GitHub of AI, and I think GitHub itself gives us a pretty interesting precedent for what Nvidia might be trying to accomplish here.

**Dylan Lewis** (2:11)
Yeah, they're a fantastic historical parallel for I think what Nvidia is looking to accomplish. We don't have to go too far back. GitHub was actually bought by Microsoft in 2018 Easy to forget because Microsoft does so many different things. But back then when the acquisition happened, the company with the largest vested interest in understanding software development was Microsoft.
They had an 80 to 90% market share with their Windows product. And for them, I think the acquisition was really understanding software development, the direction of it, and also the talent that was leading the repository and the community where developers were sharing their work. That was a massive strategic advantage that Microsoft was able to lock in. At the time, they paid $7.5 billion for that. Microsoft was worth $780 billion at the time, so it was basically a drop in the bucket for them.
This is kind of the dynamics I think we see here with Nvidia and Hugging Face. This is a very large open source community of people who are developing AI tools. It's being acquired by the company who probably has the biggest vested interest in understanding how people are using AI, the future, and its build out. As crazy as it sounds, $13 billion is a drop in the bucket for Nvidia.
The ambitions here might be for Hugging Face to remain open source. It might also be to get a better insight into the development community, and also work more closely with the talent at Hugging Face, because they are super dialed in on what the development community needs.

**Hanna Horvath** (3:34)
Yeah. I think the comparison with GitHub and Microsoft really helps contextualize that $13 billion price tag.
Like you just said, I think Nvidia is buying a position here.
It gets the developers, it gets the talent, and also gets a much closer look at what people are experimenting with, what models are gaining traction, what tools developers actually want next. And that becomes even more valuable when you look at the biggest long-term threat to Nvidia's current position, which is competition in chips. You know, some of Nvidia's biggest customers are already developing their own chips. So if Microsoft or Meta or another giant AI customer eventually becomes a little less dependent on Nvidia hardware, Nvidia wants other reasons for developers to stay inside its ecosystem. And Hugging Face can help provide that. You know, importantly, Nvidia says the platform will stay open, which means developers won't suddenly be required to use Nvidia GPUs. And that sounds counterintuitive. Like, why spend $13 billion on a platform and then let people keep using your competitors? But the logic here is that Nvidia may not need to force people into its ecosystem, they may just come. You know, if developers are already using Hugging Face and Nvidia can make its own software and chips work well with the tools that they're using there, Nvidia can become that path of least resistance. And in tech, you know, having easy integration is a very powerful competitive advantage.