Nvidia announced it will acquire open-source AI platform Hugging Face for $12.93 billion, a deal that could have far-reaching implications for the growing tech sector in South Florida.

The acquisition, first reported by the New York Post, represents one of Nvidia’s largest purchases ever. The chip giant will pay approximately $11.9 billion to Hugging Face investors, plus up to $1 billion in equity-based retention packages for employees who join Nvidia.

For Miami’s emerging AI and technology ecosystem, the deal signals a major shift in how open-source AI models are distributed and commercialized. Hugging Face, founded in 2016 by French entrepreneurs Clement Delangue, Julien Chaumond and Thomas Wolf, hosts thousands of open-source AI models that developers can download and customize freely.

Nvidia CEO Jensen Huang said Hugging Face ‘will remain an open platform for the entire AI ecosystem,’ attempting to reassure developers that Nvidia’s ownership would not restrict access to rival hardware. However, some analysts expressed concern that Nvidia could gradually make its chips the preferred option for building on the platform.

‘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, a startup that helps companies run AI systems safely.

Miami has been positioning itself as a tech hub, attracting startups and remote workers from traditional tech centers. The Hugging Face acquisition could affect local AI startups that rely on open-source models hosted on the platform, particularly those that may now face pressure to adopt Nvidia’s computing services.

The deal also highlights Nvidia’s strategy of using its massive cash reserves, totaling more than $22 billion at the end of July, to broaden its customer base as major clients like Meta, OpenAI and Microsoft develop their own AI chips to reduce dependence on Nvidia processors.

Hugging Face was previously valued at $4.5 billion in August 2023, meaning Nvidia’s acquisition price represents a nearly threefold increase in just three years.