Nvidia has paused a portion of its new financing plan designed to support smaller AI cloud service providers by offering credit in exchange for revenue sharing from services using Nvidia chips. The plan, launched less than two months ago, involved a commitment of about $36 billion over six years [1, 2, 3].
The pause followed dissatisfaction among some cloud partners over Nvidia's requirement that chips could only be rented to approved customers. Nvidia also sought control over chip allocation, which cloud partners found too restrictive [1, 2, 3]. Internally, some Nvidia employees raised antitrust concerns due to the company's deep involvement in customer operations and revenue sharing [1, 2, 3].
An Nvidia spokesperson said the business model, aimed at growing the AI ecosystem, "is still operational and evolving amid strong demand" [1].
Separately, Nvidia is in advanced talks to acquire Hugging Face, an open-source AI platform with about 13 million users, for around $12.9 to $13 billion [4, 5, 6, 7, 8, 9, 10, 11]. This would be one of Nvidia's largest acquisitions and would expand its footprint from hardware into AI software and model ecosystems [4, 5, 7, 8].
Hugging Face hosts millions of AI models and datasets and had a 2023 valuation of $4.5 billion. Nvidia previously offered $500 million for a minority stake valuing Hugging Face at $7 billion, but the current discussions point to a valuation nearly three times higher [4, 5, 6, 7].
Market analysts are divided on the acquisition's impact. Sid Nag of Tekonyx called it a strategic move to access key AI developer ecosystems, saying it will give Nvidia "direct contact to developers, models, datasets and deployment activities driving AI adoption" [11]. Patrick Moorhead of Moor Insights described the deal as strengthening Nvidia’s developer connections [11]. In contrast, David Linthicum of Linthicum Research warned that Nvidia and Hugging Face have fundamental cultural and strategic misalignments that could limit synergy, with "1 plus 1 equals 1.2 rather than 3" [11].
Nvidia reported strong Q2 FY2027 earnings on August 26, with revenue up 106% year-on-year to $96.2 billion, led by data center revenue reaching $89 billion, a 117% increase [4, 11]. CEO Jensen Huang said, "The world will need both closed-source and open-source models. As long as models succeed, I'm happy. Both closed- and open-source models will succeed and drive our sales" [11].
Nvidia projects about 70% revenue growth for FY2028, well above Wall Street estimates, assuming supply constraints do not worsen [4, 11].
Nvidia's next key event will include finalizing the Hugging Face acquisition, though no closing date has been announced.
