By acquiring Hugging Face, Nvidia gains significant influence in that ecosystem. Additionally, Nvidia previously had plans for its own cloud AI business but had trouble getting it off the ground. This could help get that engine running again.

Hugging Face’s business is reportedly not yet profitable, but the fact that it has become the de facto place to store, download, or work on open-weight models makes it highly strategically relevant at this moment, regardless of its current bottom line.

The acquisition is particularly important for Nvidia, as OpenAI, Anthropic, and other frontier labs have begun investing in their own specialized hardware on which to train and run those models, seeking vertical integration and freedom from Nvidia’s leverage.

With Hugging Face in its portfolio, Nvidia may take measures to encourage that side of the market to continue relying on its hardware.

Hugging Face is best known for hosting large language models, but it has increasingly invested in the types of models used in robotics and other physical AI applications. Nvidia is already one of the biggest players in that space, so the acquisition may open opportunities there in the future.