SANTA CLARA, California: Nvidia has agreed to buy developer platform Hugging Face for $12.93 billion, expanding its presence in the growing market for open AI models as some of its largest customers develop their own chips.

The acquisition, one of Nvidia's biggest ever, will bring the chipmaker closer to developers who use Hugging Face to find AI models and tools, potentially creating a pipeline of customers that may buy Nvidia processors to run AI services.

Nvidia had more than $22 billion in cash at the end of July. The company has been using its growing cash pile to broaden its customer base as clients including Meta, OpenAI and Microsoft develop their own AI chips to reduce reliance on Nvidia.

Nvidia's increasing investments, including some in its own customers, have raised investor concerns that the $5.4 trillion company could be artificially inflating valuations and contributing to an industry bubble.

Open models "broaden access to AI and help ensure that AI leadership is distributed across companies, institutions and communities," Nvidia CEO Jensen Huang said Thursday. "They enable organizations to match the right model to the right job."

Unlike closed systems developed by OpenAI and Anthropic, open models can be freely downloaded, run and customized by developers. Demand has increased as businesses face the high cost of deploying AI, with Chinese companies including DeepSeek and Z.ai becoming important players.

Huang sought to reassure developers that Nvidia's ownership would not change their access to models.

"Hugging Face will remain an open platform for the entire AI ecosystem," he said, adding that developers would be able to choose their preferred models, chips and cloud platforms.

Nvidia will pay about $11.9 billion to Hugging Face investors and offer an equity-based retention program worth up to $1 billion to employees who join Nvidia. The companies already work together to help developers use Nvidia's computing services on the platform.

Some analysts and developers expressed concern that Nvidia could gradually neglect competing hardware, making its chips the only practical choice for developers using Hugging Face.

"While they have stated otherwise, it is likely that, at a minimum, technical methods will get instrumented to provide a competitive advantage," said Harold Byun, CEO of BlueRock. "That's something any rational company would seek to do."

"Nvidia is clearly buying strategic influence as much as current earnings," said Axel Rudolph, chief technical analyst at IG Group.

Founded in 2016 by French entrepreneurs Clément Delangue, Julien Chaumond and Thomas Wolf, Hugging Face hosts AI models and provides datasets, software libraries and cloud services used to build and deploy AI applications.

The New York-based startup was valued at $4.5 billion in its last disclosed funding round in August 2023, when it raised $235 million from investors including Salesforce, AMD and Amazon.