Nvidia's potential Hugging Face deal shows how far it's moved from its GPU roots

Almost 180 years ago, a hardware store owner witnessed a shift in demand from basic tools to equipment for gold mining. Instead of focusing on mining itself, the owner began selling maps, accommodations, and financing for prospectors, effectively inching closer to the gold itself. This scenario mirrors Nvidia's current strategic shift, as the graphics chip maker explores deals that blur the line between providing tools for AI development and gaining a stake in the AI gold rush.

Late last week, Business Insider reported that Nvidia and Hugging Face were negotiating a deal worth over $13 billion. Hugging Face is the go-to platform for open-source AI models, hosting more than 2 million of them. As cheaper open-source alternatives rise, Nvidia's involvement with these developers could prove advantageous. Nvidia is already an investor in Hugging Face, and further collaboration may help the company fend off rivals who might eventually create their own AI chips.

This move marks a significant departure from Nvidia's original business model of merely selling GPUs, demonstrating the company's ambitious expansion into the AI ecosystem.