Nvidia’s stock is hovering just below its all-time high of $235.74, set on May 14, and on Friday it was trading around $228 with gains of roughly 2% on the session. The proximity to a record is good copy. But the more interesting question is what Nvidia is spending money on while Wall Street watches the price.
On Thursday, Nvidia agreed to acquire Hugging Face in a transaction valued at about $13 billion, adding a popular software platform to the chip giant’s AI empire. The agreement marks a significant jump from Hugging Face’s $4.5 billion valuation in 2023, following a $235 million funding round. Already, Hugging Face says more than 18 million developers, researchers and creators use the platform to share more than 3 million models. Nvidia also said Hugging Face hosts about 500,000 data sets and 1 million applications.
Read past the headline figure. This acquisition is a confession as much as a conquest.
Pretty much all of the biggest closed-source AI labs, including OpenAI, Google, Amazon, and Anthropic, are now in the process of building their own AI chips to lessen their reliance on Nvidia. Custom AI ASIC shipments from cloud providers are forecast to grow about 44% to 45% in 2026, against roughly 16% growth for merchant GPUs, with ASIC shipments projected to triple by 2027 versus 2024 levels. Nvidia’s best customers are quietly engineering their way out from under it.
A thriving ecosystem of open-source AI models gives customers more alternatives to those closed labs, which in turn keeps more of the market dependent on Nvidia’s hardware. Owning Hugging Face locks that logic in. If developers keep building on open models, they keep training on GPUs. And right now, those GPUs are overwhelmingly Nvidia’s. Nvidia is widely estimated to control more than 80% of the AI accelerator market. In fiscal 2026, Nvidia reported $193.7 billion in data center revenue.
None of this means Nvidia is in trouble. Its biggest moat isn’t the silicon, it’s the software. That software advantage is exactly what the Hugging Face deal reinforces. Nvidia CEO Jensen Huang said the company plans to keep the platform open. Keeping it open is the point: a closed Hugging Face would push developers elsewhere. An open one, backed by Nvidia’s compute resources, is a gravitational pull.
For investors watching the stock flirt with its high, the Hugging Face deal is the more durable signal. In fiscal 2026, Nvidia’s revenue rose 65% year over year to $215.9 billion. The company also said it returned $41.1 billion to shareholders in fiscal 2026 through share repurchases and cash dividends. That is a company generating serious cash and deploying it with strategic discipline.
The risk worth watching: the cloud giants need Nvidia to build the AI businesses that justify their alternatives. That gives Nvidia a remarkable near-term position and a more complicated long-term one. If custom silicon matures faster than expected, Hugging Face becomes more valuable, not less. Either way, Nvidia is playing the right game. Whether the stock’s current price fully reflects that is the harder call.
