Let’s rewind almost 180 years.
You run a hardware store that is doing good business when people suddenly start buying picks and shovels. Like, a lot of of picks and shovels.
Before you know it, business is booming. They’re hunting for gold and they need your tools to find it. Not everyone succeeds, but that doesn’t matter to you. You sell the dream of a golden fortune, but you don’t chase it.
Then a thought creeps in: How can I participate in the promotion? Your pick-and-shovel business may be insulated from the risks of gold mining, but it’s also missing out on its biggest benefits. And besides, this run might not last forever.
So you start selling maps of the gold mines. Build a barracks where gold diggers can sleep. Even lend money to some. You’re not technical mining, but you get very close.
The questions then become: are you building a business empire? Or are you just trying to keep the gold rush going?
That’s the debate surrounding Nvidia’s ever-expanding business plans.
Earlier this week, my colleagues Katie Roof, Geoff Weiss and Ashley Stewart announced the news Nvidia was in talks to acquire Hugging Face for more than $13 billion. (Katie also had the original scoop on Sunday Cuddly face was on the market.)
Hugging Face is the basis for open-source AI models. The platform hosts more than 2 million. Now that cheaper open models are becoming increasingly popular, it makes sense that Nvidia is working with these developers. (It’s also already an investor in Hugging Face.)
And as Geoff explains: building deep connections with that community could serve as a useful hedge against top AI labs who could eventually try to take out Nvidia by making their own chips.
It’s also another example of Nvidia moving away from a pure pick-and-shovel approach to the AI tree and getting closer to the actual mines.
Of backstopping loans for businesses massive AI buildouts to work with Wall Street companies Fund $500 billion in AI infrastructurewe’re still a long way from Nvidia selling only the GPUs that power the AI boom.
Generally, Nvidia is enabled a deal-making wave. Investments in private companies amounted to $47.9 billion at the end of July. That’s more than double what it was at the end of January ($22.3 billion).
Some might argue that this is simply good business for a company trying to maintain its place at the top. And since Nvidia sitting on a pile of moneywhy not spread his bets?
But at what point does it become less about growing your business and more about getting people to buy from you in the first place?
