Nvidia Buys Hugging Face 9/3/26

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer, today on Squawk Pond. One big deal in video 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'll go ahead, Jen said. CEO of the world's most valuable company, Invidia's Jensen Wong, now a key Silicon Valley power broker. Invidia's the largest AI computing platform in the world. We support clouds, we support new clouds, 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. We hear from CEO Clemente Long. We needed open models, why? 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,

1:05and 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 Pond begins right now. And Becky Bye and 3, 2, 1, kill please. Good morning everybody. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq Market site in Times Square. I'm Becky Quick, along with Andrew Ross Sorkin. Joe is out today. The NBA now suspending Los Angeles liposoners Steve Bomber for a year for allegedly helping violate a league salary cap rules related to a star player, Kawah Leonard, and it was a fastening story. In summary, we should give a little summary. The findings assembled by a law firm that was Wachtel, 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

2:09and the companies. Now, the NBA hit the Clippers with a $30 million dollar fine. That's the league's largest ever fine. 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 it as the co-founder of Microsoft? I don't know. No, we'll put it. He was an early employee. He was an early employee of 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. Salar Cap, he said, I accept full responsibility for lapses and 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 in. 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.

3:12There was nothing that was going to happen to Steve Vommer and that he was basically being vindicated in all of this. There are a lot of people who are questioning some of the original stories about this. You should see that Steve Vommer himself and the Clippers put out a statement last night that really fires back very vociferously at this. We need to have that statement and take a look at this as well. He's coming out and guns blazing. He spent $50 million 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 are going to be some repercussions because they're not taking this sitting down. They're fighting back. He's saying that Steve Vommer is saying basically his reputation has been besmirched from the beginning based on something that came from a podcast on this.

4:12He put out, I think I read three or four pages of a response to this last one. What I don't know is what kind of, he can come back and say these things. Can he go to court over this? I don't know. I don't know what's standing out between you and the NBA. Then you arbitrate these things. What's the... I wonder if he's considering a separate lawsuit against the league because he does not. 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 Vommer himself had a pretty vociferous response that came through with this. It sounded like he's not going to take this and is not going to go quietly into the night based on this. What I 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 know that the league probably could... Maybe you could go to court over something like this. But then I don't know... Well, if you feel like your reputation has been besmirched, maybe you have a set of laws. But what I also... But I don't know if you have any standing with the league to change it.

5:13Standing 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. Correct. I've got to find the entire statement that comes from him. Well, we will love 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. The bomber'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 in investigate investigating any one of the teams in the NBA, you're going to find situations like this. And that's where you wonder if there is more to come with this. New York City out with some new guidelines on AI and education, the city implementing

6:14a one year more auditorium on public elementary and middle school students using the technology in classrooms. Policy will affect about 600,000 students. Mayors are on Mondani said that schools would stop the current use of about 40 educational tools at a press conference. He said children need teachers in 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 less than planning. But this gets straight, right at sort of larger national question about how parents are supposed to parent and what AI is supposed to do. Also gets at this very interesting alpha school group, which is trying to affect that we 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 students, your kids there, you effectively have to attest that you are teaching them at home. Right because they don't have the certification.

7:14Because 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 in 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 days into school right now. It's an interesting transition. I'm all for the kids, but they are talking. I'm for that. They are looking at each other just like that school night last night. She's will be next. Coming up on SquawkPod, 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. This is SquawkPod from CNBC. Straight up on Becky, three, two, one, up on Becky. Cute. We've got some breaking news to tell you about a significant deal taking place, a deal

8:15that'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. 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. This is a situation where they're going to be bringing hugging face in. Nvidia is making the point that it will remain an open platform for the entire AI ecosystem. They say that Nvidia compute will not be required to build on or to deploy through hugging face. This is an interesting step as Nvidia kind of moves beyond just the chip making capabilities, brings it quite a bit deeper into what it's going on in the AI infrastructure. Hugging face, of course, is a platform of open source AI models. Deal, this size is a very large one for Nvidia.

9:17In fact, it's about the second largest in the company's history. CEO 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 SquawkBox to talk about this deal. It'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 there. 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.

10:19What 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 you've been tough to not keep it open. Right. 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- The other idea is this is a very big price to pay for this. You want to justify the price and shareholders will say, well, they'll have to be using a lot of Nvidia. But then you also have to say, we are going to keep it open to do that at the same time. So how do you 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 SquawkBox. Nvidia is officially acquiring hugging face for $12.93 billion. Joining us to talk about this deal right now is Nvidia's 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.

11:20It's the hugging face. All right, Jensen, let's- 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- 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 engineering 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. So that's really how we 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 open AI's agents kind of breaking in between May and July.

12:22You catching them finding that was there. Was that the catalyst or was there- 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. So it did show the importance of open source. And I think in more generally in the fields, you're going to see the IP of the intro pick 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 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

13:27down an open source AI to really distribute the technology as much as we can all over the world. Jens, 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? 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. In Videos, the largest AI computing platform in the world, we support clouds, we support NEO clouds, we support enterprise on prem, we're all over the world. And what you're seeing right now is that in the last four years and really accelerating in the last six months, AI has become useful.

14:29And 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, because it's off to the shelf, it's incredibly good, it's advancing very quickly. We use cloud code here, we use codecs, 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. 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, the open frontier AI models are sufficiently

15:30good 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 direction 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. Yeah, Jensen, when Clim 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 price tag? I think $4.5 billion was the valuation back in 2023 when there was a big round of

16:35the others like Google and NVIDIA and Salesforce all kind of stepping in at that point too. 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, and also where 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. And then make sure that it can continue to thrive and grow because as it turns out, they've

17:36been working on this now for 10 years. Their vision is spot on that the large, there's a large community and industry of people who really need open models. So their vision was spot on. And at the 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, this everything is going so well and I really wish that they would continue on a standalone basis. But there are other bitters and $12.9 billion is what it took to close the deal. And it's worth every single penny. And 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

18:36committed to it. We're so dedicated to it already. It's really important to us that it lands in a good place. And Nvidia is a great home for them. Jensen, Andrew asked the question before the break when we came up here just to talk a little bit about why you did this. It sounds like you're confirming that. You were concerned that if it wound up in different hands, it might break the system that was there. You paid $12.9 billion to keep it out of others hands? No. Well, we paid $12.9 billion because one, that's what it's worth. And two, open models means so much to us. And if a hugging face was looking for the next chapter and a home for their company, Nvidia should be it. And Clum was so gracious to come to me and he told me about his home and about the company he's built and it's time for him to consider a next chapter and he's got other interests

19:37and other companies who are interested in the company. And so the fact that this is so important to us is such a large growth driver of our company. And together we can scale open community even faster than they're able to do today, which will be great for Nvidia. And so this is great for hugging faces. This is great for the open model community. It's great for Nvidia. Clum, what are your other interests and are you going to stay with hugging face? Yes, the three founders and the whole team is going to join Nvidia. Jensen was in our all company team meeting just a few minutes ago and you couldn't imagine how everyone was excited about that. So the goal really is to join Nvidia to continue to run independently neutral platform within the Nvidia team. And everyone is super excited to get to this next level and reach even more impact.

20:41As Jensen mentioned, we have 18 million AI builders using us. I think in the next few years we should aim at getting 100 million AI builders on hugging face and really empower anyone in the world to not just be an AI user but also be an AI builder themselves and own their intelligence. I think if we achieve that, we will have kind of like a massive impact in the world. There had been reports that there could be as much as a billion dollar retention plan put in place to keep the talent at hugging face. Is that the case? Yes. So we're not hugging faces all about the talent. I'm not commenting. No, there's no reason not to. The talent is everything. The talent is absolutely everything. And so the people of hugging face and the employees of hugging face have this is their lives

21:43work. And they've done such an incredible job and such an incredible service to the world in the industry to create this platform where all of the community can come together to advance AI together. And when people work in the open, it is safer. It is more secure. The technology advances more quickly. That's the reason why Nvidia contributes so much to hugging face and we're so committed to hugging face. This opportunity allows us to bring the two companies together and move even faster and scale the open platform even more broadly and even more quickly. So this is a huge win for hugging face. There's a huge win for the community, huge win for us. I was just happy that when he was, of course, I'm always happy when companies thrive and they continue to be a great partner of ours. However, if he's thinking about the next chapter of hugging face, it absolutely should be an Nvidia. Clem, Jensen mentioned that there were other bitters involved.

22:44Did you go to Jensen first? Who were the other bitters? Yeah, I went to Jensen first because, as I said, I think Nvidia is the perfect home for a new face. Why did the alignment ease of use? I think when Jensen led this letter in support of open source during the summer, it was another example of the alignment of the mission, alignment of the cultural alignment. I think we're trying to achieve very similar missions in the world. And so Nvidia was definitely the best home for hugging face. The letter that went out that was before your discussion started taking place. Yes, yes, it was. I mean, Nvidia has always been a great partner of ours over the years. As Jensen mentioned, the largest American contributor to the platform, we've opened models but also open datasets. So obviously, we've known each other for quite a while.

23:47But the discussions went quite fast because it was quite obvious, I think, to everyone that this was like the best fit. And that was giving us a chance to really go further bigger, get to 100 million AI builders, as I was mentioning, and really make sure that open source AI is a great force in the field and in the world. Who were the other bitters? Were they some of your other investors? I don't think it matters. It matters so much. Again, I think Nvidia was the best home for us. We're super happy. As Jensen mentioned, we studied 10 years ago. We hope that in the next 10 years, we've been video, we can achieve great, great things. Oh, Benji, it doesn't matter who the other bitters were. It only matters who wins. Yeah, we're interested. We want to know who was in the running for this stuff too. Jensen, you put out in this blog post this morning.

24:49You said, Nvidia Compute will not be required to build on or deploy through hugging phase. You mentioned already, it's pretty important that this stays open. I guess maybe there's the question of why not say, hey, we're just going to make this Nvidia powered only and really push our advantage on that. Why not do that? That's just not the open ethos. When you think about what Nvidia does, we contribute more to open models and open data sets than anybody in the world. Just take a step back and just think. There are a lot of people contributing to open source and open models and open data and open scripts and things like that. We contribute more than anybody else. We contribute the model, the data set that we use to train it, the scripts necessary so that you can reproduce our model exactly as we have it. We contribute all of that to the world and it runs on everybody else's platform.

25:49This is the open ethos. If you really believe in advancing the technology quickly, safely, securely, and you want this to benefit every single industry, every single company, including companies that you might compete with, that's the open model ethos. We're completely bought into it. So much of the Kudistack is open. The original large model training script called Megatron Core, that Megatron Core was open source by us. In enabled, everybody to scale up their training of AI models, the inference platform called Dynamo, completely open, enabled everybody to inference at very high scale. We really believe in advancing this technology for an event of society and of course, accelerating the industry. Of course, it's great for our business because we're also the world's largest AI computing platform for training and for inference.

26:50Therefore, when AI advances, whether it's in the cloud in an on-prem data center, like a drug discovery company, an incredible supercomputer center that Lilly built, or all the way out at the edge in a self-driving car or a robotic system, and video benefits whenever AI advances. This is great for the industry, it's great for companies, it's great for countries, and it's great for us. Klem, you said you wanted to do this because, look, there are a lot of concerns about what's happening with AI and how quickly things were moving. There was a report just yesterday that looked at the new astromodel that OpenAI is bringing up. And real concerns from security experts saying, there's opaque recurrence that is happening with this model that really has experts rattled about what this means. Can you stop some of these agents? They're doing things that hadn't been expected before. The chain of thought will be more difficult to monitor.

27:52What's your concern on this level and what do you think you can do about it? Well, I think what we learn is that locking everything behind closed doors doesn't work. Why? Because that's what's been happening. Like if you look at the models that attacked us during the cyber attack, it was actually an unreleased model behind closed doors. So this approach doesn't work. What we feel like works is distributing this technology, especially with open weights, so that you leave all the playing fields and you give everyone the ability to defend themselves. The real risk is when you have massive asymmetry of power and capabilities between two players, because that's when the attacks can be the most dangerous. But when you leave all the playing fields and you give everyone the same tools, the system

28:53continues to work. And if the attacks become more sophisticated, the defense will get more sophisticated. And so at the end of the day, this is a system that works. And in this system, obviously open models, open data sets, distributing the technology as much as possible is the most important thing. And Becky, this is such an important point. Becky, if I could jump in for a second, this is such an important point. If you recall, the transition from a computer being a personal computer to the computer being an infrastructure for the world is when the world need an open source Linux. The fact that you can build open source Linux in plain sight, Kubernetes in plain sight, it's the safest is the most secure way of doing something. In the world of cybersecurity, everybody knows asymmetry, defense is ultimately your best defense. And when I say asymmetric capability, there are way more people who are protecting than

29:56there are people who are attacking. And so the benefit of having the community come together with open models so that they can collaborate all transparently with each other gives the defenders an asymmetric advantage over the attackers. Jensen, are you concerned about what open AI is building then? Hang on a second. Ask, hey, somebody take... Yeah. Quen, let me ask you, we'll get back to Jensen with that in a second. I think he must have the president calling. Quen, let me ask you, you have said that open AI, that you think China is winning on the open AI front. Do you think that's still the case? Well, we think on the platform and that's kind of like also a beauty of what we are announcing today is that with open source AI, it can come from anywhere around the world, right? Obviously I'm French, as you can hear from accents. They have a big part of the team in France.

30:58And we have big and important contributors to open source AI there, right? With Mistral. In Canada, we have co-hear. In China, there are a lot of important contributors to the open source AI field. So, and one of the things that we want to focus on with NVIDIA is to continue to do that, which more sovereign AI. So give any country the ability also to own their own AI and build their own AI. And we hope it's going to accelerate in the next few years. Great. I think Jensen can hear us again. Jensen, my question was, based on what you just said about why things need to be open, are you concerned about the models from the closed models that are here, open AI and anthropocry? What about what they're doing at this point? Well, I'm not exactly sure what they're doing, but there's a place for closed models and there's a place for open models.

31:59The fact of the matter is, is defenders need access to frontier capability, open models. And that access really enables the defenders to be able to innovate and build their domain specific cybersecurity expert harnesses and turn them into great AI's. And you saw the other day, the partnership that we announced with CrowdStrike using NVIDIA's open models, Nimaltron, they were able to create a frontier AI cybersecurity AI defender. And that capability, I think you're going to see a lot more of. I think the bottom line is that the way to think about that is you want to put in the hands of defenders all of the best technology you can as quickly as you can. And there's just no better way of putting great technology in the hands of defenders and the world to defend themselves than open technology, open model, open source.

33:02Which is the reason why we're doing all of this. The collaboration with CrowdStrike is the first step. We're going to see a lot more collaborations around open models in the world of cybersecurity because that's what it takes to defend the world. You can't rely on just one or two companies to do so. You have to enable the entire crowd, if you will, the asymmetry of defenders who want to defend themselves to be able to enable that to happen. Okay. Jensen, Climb want to thank you both. Congratulations on the deal and we appreciate your time this morning. Thank you Becky. Congratulations Climb. Thank you so much. Thank you. Thank you. One thank you Jensen. Thank you. We'll be right back. That's it. That's Squawk Pond for today. Thanks for listening. Squawk Box is hosted by Joe Kernen, Becky Quick and Andrew Ross Sorkin, tune in weekday mornings on CNBC at Six Eastern.

34:03To get the smartest takes an analysis from our TV show, right into your ears, please follow Squawk Pond wherever you get your podcasts. We'll meet you right back here tomorrow. We are clear. Thanks guys.