Nvidia Buys Hugging Face 9/3/26

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0:59Jensen Huang:Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. One big deal, NVIDIA has officially agreed to buy open source artificial intelligence platform Hugging Face for nearly$13 billion. What happened? How did you two get together? We, we, oh, go ahead, Jensen. CEO of the world's most valuable company, NVIDIA's Jensen Wong, now a key Silicon Valley power broker. NVIDIA is the largest AI computing platform in the world. We support clouds. We support neoclouds. We support enterprise on-prem. We're all over the world. Wong on one of his largest deals ever, hugging face a virtual library of AI models that has been targeted by hackers and is ready for the fight of its lifetime.

1:46We hear from CEO Clementa Long.

1:48Jensen Huang:We needed open models, right? Because if you remember, we couldn't defend ourselves. The full conversation on AI's big future. AI models are now sufficiently good. The open frontier AI models are sufficiently good. And the agent harness systems that makes it easy for you to build your own AI are now sufficiently good that both sides are now growing incredibly fast. A huge show today. It is Thursday, September 3rd, 2026. Squawk Pod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good morning everybody. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square.

2:33I'm Becky Quick along with Andrew Ross Sorkin. Joe is out today.

2:37Jensen Huang:The NBA now suspending Los Angeles Clippers owner Steve Ballmer for a year for allegedly helping violate league salary cap rules related to star player Kawa Leonard. And it was a fascinating story. In summary, should we give a little summary? The findings assembled by a law firm, that was Wachtell, that investigated the Clippers, saying that the team initiated off-court income opportunities between Leonard and four companies doing business with the team and facilitated endorsement deals between Leonard and the companies. Now, the NBA hit the Clippers with a$30 million fine. That's the league's largest ever fine.

3:15Jensen Huang:The Clippers will also be subject to monitoring and forfeit five first-round draft picks starting in 2029. So it's going to have a big impact. Bomber is, of course, the co-founder of Microsoft, according to Bloomberg, the ninth richest person in the world. Are we describing him as the co-founder of Microsoft? I don't know if I put it in the back. He was an early employee. He was an early employee at Microsoft. In a statement, the Clippers saying that the team rejects the league's findings and intends to vigorously challenge them. in a statement through his agent. Leonard said he had no knowledge of anyone's intent to circumvent the NBA's salary cap.

3:49Jensen Huang:He said, I accept full responsibility for lapses in judgment by people within my inner circle and regret the distraction this situation has caused the fans and my family. It raises questions about the ESPN story, which we talked about, I don't know if you were Ian. I wasn't here that day. Two weeks ago, that came out and said there was going to be no, that the case was not real. There was nothing that was going to happen to Steve Ballmer and that he was basically being vindicated in all of this. And so there are a lot of people who are questioning some of the original stories about this. But you should see that Steve Ballmer himself and the Clippers put out a statement last night that really fires back very vociferously at this.

4:31We need to have that statement and take a look at this as well. His he's coming out guns blazing. He said they spent he spent 50 million dollars on legal fees, hired all kinds of firms that the NBA wanted him to hire for these investigations on some of these things. He blasts the commissioner, Adam Silver, on this as well and says, when you came out and said this, you said that you were going to proceed with this investigation. It would be done fairly in a way that you yourself would want handled. They said it was unfairly handled. I mean, there's there are going to be some repercussions because they're not taking this sitting down.

5:01They're fighting back and saying that they've been, you know, Steve Ballmer saying basically his reputation's been besmirched from the beginning based on something that came from a podcast on this. He put out, I think I read three or four pages of a response to this last night.

5:15Jensen Huang:Well, what I don't know is what kind of, you know, he can come back and say these things. But can he go to court over this? Is that the next step in this? I don't know. When you're in the NBA. Can you arbitrate these things? What's the. I wonder if he's considering a separate lawsuit against the league because he disagrees with us. I don't know how that would work, how it would come out. But I will tell you, he is angry and he's saying it very clearly. This is just part of the statement from the Clippers. But Steve Ballmer himself had a pretty vociferous response that came through with this. And it sounded like he's not going to take this and is not going to go quietly into the night.

5:53Jensen Huang:What I just don't know is, and maybe it says right here, in every avenue available to us, meaning that we're going to vigorously challenge this. What I don't know in the larger scheme of things is you probably, maybe you could go to court over something like this, but then I don't know. Well, if you feel like your reputation's been besmirched, maybe you'd have a separate lawsuit. But I don't know if you have any standing with the league to change it. Standing with the league, and I also don't know what therefore happens longer term with your ability to remain an owner in the league. Because ultimately, the league really does manage and decide who is an owner.

6:24Correct. I've got to find the entire statement that comes from him. But I mean, he really pushes back pretty vociferously. And I will say, when I saw the original stuff, I was like, wow, you can't do that. Balmer's point when they push back is that, you know, if you spent$50 million investigating any single one of these teams in the NBA, you will find instances where the teams have introduced their players to potential sponsors. And that's not against the law. It's not against the rules of the league. So he was very angry about this and saying, yeah, if you spend$50 million investigating any one of the teams in the NBA, you're going to find situations like this.

7:03And that's where you wonder if there is more to come with this.

7:09Jensen Huang:New York City out with some new guidelines on AI and education. The city implementing a one-year moratorium on public elementary and middle school students using the technology in classrooms. The policy will affect about 600 ,000 students. Mayor Zoran Mandani said that schools would stop the current use of about 40 educational tools at a press conference. He said children need teachers and human connection in order to learn and grow. Public high school students will still be allowed to use AI in some cases, and teachers will be able to use it for lesson planning. But this gets right at sort of a larger national question about how parents are supposed to parent and what AI is supposed to do.

7:46Jensen Huang:also gets at this very interesting alpha school group, which is trying to effectively put AI right in the classroom at the very elementary level. Currently, they have an outpost in New York that just opened last year. I believe if you enroll your kids there, you effectively have to attest that you are teaching them at home. Right, because they don't have the certification yet. Because they're not certified. And by the way, at this rate, they clearly are not going to get certified. I mean, look, there's a big pushback against technology in schools at this point to make sure kids are doing it themselves.

8:23In New Jersey, they passed a law that you're not allowed to have your phones at all during the school day. And it's a couple of days into school right now. And it's an interesting transition for the kids. But they are talking. They are looking at each other. Just went to school last night.

8:38Jensen Huang:Cheese will be next. Coming up on Squawk Pod, NVIDIA's Jensen Wong on one of his largest acquisitions to date,$12.9 billion for AI platform Hugging Face. Our extended conversation in full when we come back.

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10:29This is Squawk Pod from CNBC.

10:32Jensen Huang:Straight up on Becky. Three, two, one. Up on Becky. Q. We've got some breaking news to tell you about. A significant deal taking place, a deal that's actually been reported on and expected for some time. This is actually happening. NVIDIA is acquiring Hugging Face. It says that this is a deal that's going through. There's just a blog post that's out from Jensen Wong, and he is saying that they are acquiring Hugging Face for$12.93 billion. This has been, again, widely speculated on over the last about a week or so, that reporters have been kind of hearing about this, seeing some of these things.

11:09This is a situation where they're going to be bringing Hugging Face in, and NVIDIA is making the point that it will remain an open platform for the entire AI ecosystem. They say that that NVIDIA compute will not be required to build on or to deploy through HuggingFace. But this is an interesting step as NVIDIA kind of moves beyond just the chip making capabilities, brings it quite a bit deeper into what is going on in the AI infrastructure. HuggingFace, of course, is a platform of open source AI models. A deal this size is a very large one for NVIDIA. In fact, it's about the second largest in the company's history.

11:48CEO Jensen Wong writing in a blog post on this, again, that Hugging Face will remain an open platform for the entire AI ecosystem, and developers will choose how they want to work with some of these things. It's an expensive price point,$12.93 billion. There is the anticipation that there could be up to a billion dollars in additional money to try and keep some of these employees on as retention bonuses that go to that. So I guess maybe you add that to the cost of the deal going through. But the CEOs of both NVIDIA and Hugging Face are going to be joining us in just a few minutes right here on Squawk Box to talk about this deal.

12:24It's an interesting one, Andrew, because of the move that Jensen and others have made towards the open AI system, not just the closed models, the frontier models that have been their biggest customers.

12:35Jensen Huang:Well, the big thing that I'm so curious to hear from Jensen about is just this idea of the rationale for buying this. Was it to prevent somebody else from effectively buying Hugging Face and turning it into a closed system? What was the rationale? I mean, clearly he's going to keep it open, which is great. But if he didn't do it. I think it would be tough to not keep it open from a regulatory perspective. But if he didn't do it, what was going to happen to Hugging Face? I mean, I think that's the thing that I think. The other idea is this is a very big price to pay for this. You want to justify the price and shareholders are saying, well, they'll have to be using a lot of NVIDIA.

13:11But then you also have to say, we are going to keep it open to do that at the same time. So how do you kind of match up the price with the idea that you're keeping it open? Is it worth the price of admission? And we're going to hear from both Jensen and from Clem in just a few minutes right here on Squawk Box.

13:30NVIDIA is officially acquiring Hugging Face for$12.93 billion. Joining us to talk about this deal right now is NVIDIA CEO Jensen Wong and Hugging Face CEO Clem DeLong. Gentlemen, welcome to both of you. It's good to see you. And Jensen, I like your sign. It's the Hugging Face. All right, gentlemen, let's talk.

13:51Jensen Huang:I have one in the background, too. Yes, I see. The one right behind you. This deal has been rumored. There have been people speculating about this for well over a week at this point. What happened? How did you two get together? Well, we... Oh, go ahead, Jensen. No, Clem, I'm going to let you go first. Yeah. So, I mean, during the summer, I think we realized that Hugging Face and open source AI in general was at the turning point and that it needed more resources, more scale, more visibility. So we went to see Jensen and we told him, we want to make open source AI big. And he told us, let's do it.

14:34Jensen Huang:So that's really how it started. And a few weeks later, here we are. Clem, what happened over the summer? Because when you say something happened over the summer, the first thing that pops to my mind was OpenAI's agents kind of breaking in between May and July, you catching them, finding that was there. Was that the catalyst? Or were there other things happening that made you think, we really need deeper pockets? When that happened, what we realized is that we needed open models, right? Because if you remember, we couldn't defend ourselves with proprietary closed source APIs. So we had to use open models to defend ourselves.

15:12Jensen Huang:So it did show the importance of open source. And I think more generally in the field, you're going to see the IPO of Entropic in a few months. I think there are two paths where there's a path where proprietary APIs are dominating the field and everyone is kind of like outsourcing their AI to them. And there's a path where open source AI is available to everyone and everyone can actually become like an owner, a builder of AI and not just renting it or using it from other people. And so I think it became clear that there was these two paths and that we needed to double down on open source AI to really distribute the technology as much as we can all over the world.

16:02Jen said you've been recently talking an awful lot about how open AI is a very important path, you and other leaders, but you have been pretty outspoken on this. But the closed AI, the large language models, those companies like open AI and Anthropic, they've been some of your biggest customers and continue to be some of your biggest customers. How do you walk this path between closed AI and open AI?

16:26Jensen Huang:In fact, if you talk to the closed model labs, they also tell you they are very supportive of open models and they believe there's a place for open models. NVIDIA is the largest AI computing platform in the world. We support clouds. We support neoclouds. We support enterprise on-prem. We're all over the world. And what you're seeing right now is that in the last year, and really accelerating in the last six months, AI has become useful. And these tokens are, these AI models are generating productive tokens, and they're doing so for both closed models as well as open models. I recommend that people use closed models as much as they can, you know, because it's off the shelf.

17:12Jensen Huang:It's incredibly good. It's advancing very quickly. We use Cloud Code here. We use codex. We use perplexity. We use cursor. Whenever we could use a rented service, because it's done so well, we should use it as much as we can, and we do. However, there are so many companies, whether it's fundamental science research, companies who have domain expertise and proprietary information that they want to protect. Maybe it's something to do with a regulatory reason or sovereignty reason. They need to have control, ownership, and the continued advancement of their own intellectual property. And so AI models are now sufficiently good.

17:55Jensen Huang:The open frontier AI models are sufficiently good. And the agent harness systems that makes it easy for you to build your own AI are now sufficiently good that both sides are now growing incredibly fast. And so you know that cloud service providers represents only half of NVIDIA's business. And yet the other half of our business are really largely driven by open models. And so NVIDIA is growing in both directions. And our fundamental goal is just to make sure that AI advances as quickly as possible. And it's really, really important right now as the open models are really accelerating that we make sure that we provide Hugging Face the platform to continue to scale and for the resource for them to scale and extend the open model ecosystem and community.

18:46Yeah, Jensen, when Clem came to you and said that they wanted to partner up, how did you react? What did you think? And how did you all get to the 12.93 billion dollar price tag? I think$4.5 billion was the valuation back in 2023 when there was a big round of others like Google and NVIDIA and Salesforce all kind of stepping in at that point, too.

19:08Jensen Huang:Well, Hugging Face, as you know, they have 200 ,000 enterprise customers, 18 million developers around the world, 3 million models that are now 3 million models that are available on Hugging Face. It goes across languages and world foundation models and physics models and chemical models and biology models. It basically cuts across every single field, robotics models, every single field of AI. And when he came to me, you know, and also we're the largest contributor of open models in the world by far. And when he came to me and said that they're thinking about their next chapter, my first thought was, of course, I want to make sure that this platform, this company is in great hands.

19:57Jensen Huang:And to make sure that it can continue to thrive and grow. Because as it turns out, they've been working on this now for 10 years. Their vision is spot on, that there's a large community and industry of people who really need open models. So their vision was spot on. And at a time when open models are accelerating, this is really a very, very delicate time. And we want to make sure that it has all the support necessary. And so when he came to me, my first thought was, oh, no, you know, this everything is going so well. And I really wish that they would they would continue on a standalone basis.

20:36Jensen Huang:But there are other there are other bidders and twelve point nine billion dollars is what it took to close the deal. And it's worth every single penny. And, you know, as you know, NVIDIA, as I mentioned, NVIDIA is the largest AI computing platform in the world. Open models matters greatly to our company, which is the reason why we invest so much ourselves. There are so many industries beyond languages that benefit from open models. And we are completely committed to it. And we're so dedicated to what we're ready. It's really important to us that it lands in a good place. And NVIDIA is a great home for them.