If the $12.9 billion acquisition of open source model Hugging Face by Nvidia is completed, it suggests Nvidia is changing its focus to supply the full artificial intelligence AI stack and ecosystem, rather than remain primarily the world's dominant supplier of graphics processing units.
In other words, Nvidia would shift from being a supplier of “picks and shovels” and be a supplier of models, apps and inference. Or, as we so often say, Nvidia seeks to move “up the stack.”
The move might also represent another way of Nvidia inserting itself into the “AI compute as a service” portion of the value chain, something it originally attempted with its proposed DCX Cloud.
Such shifts by competitors in the value chain, with many participants moving into additional roles, is not unusual. OpenAI, Anthropic, Google and Amazon, for example, now are designing their own AI chips, partly to reduce their reliance on Nvidia and also to reduce their own operating costs.
Assuming Hugging Face neutrality is not compromised by the acquisition, Nvidia might hope to gain in several ways, defensively expanding beyond a reliance on chop revenue and also moving up the stack in functions and across the other parts of the value chain.
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