Nvidia is on a buying spree. |
It’s investing $10 billion in Anthropic and $30 billion in OpenAI – right before these private stocks go public. |
Go here to secure your Pre-IPO shares today. |
Nvidia (Nasdaq: NVDA) has agreed to buy Hugging Face for $12.9 billion. |
Business Insider reported the talks were advanced. Neither company has confirmed a deal. |
If it closes, it's the largest acquisition in Nvidia's history — nearly double the $7 billion Mellanox deal in 2020. |
Hugging Face is where developers go to find, download, and share open-weight AI models. Think of it as the GitHub of machine learning. |
There are roughly 13 million users on the platform and more than 2 million public models. Hugging Face does approximately $150 million in annualized revenue. |
That last number is the one to sit with. At $12.9 billion, Nvidia is paying roughly 86 times sales. |
Do you want to buy Pre-IPO shares of Anthropic and OpenAI? Go here to get started. |
Nvidia also passed on this business once already. Late last year Hugging Face turned down a $500 million investment from Nvidia at a $7 billion valuation. The price nearly doubled in under a year. |
So, why would Nvidia buy this company? |
Nvidia already owns the compute layer — chips, CUDA, networking, inference software. Hugging Face owns the distribution layer. Whoever owns the hub sets the defaults: which models get featured, which checkpoints ship pre-optimized, which one-click deployment shows up on the page. |
Here's the bigger reason. |
OpenAI, Anthropic, Google and Amazon are all designing their own AI chips. These custom chips could allow these companies to reduce their dependency on Nvidia GPUs. |
Open-weight models cut the other direction. Anyone can download them and run them anywhere — and most of that hardware still speaks CUDA. Millions of developers running open models spreads demand across thousands of buyers instead of concentrating it in five hyperscalers with the leverage to negotiate. |
Nvidia isn't paying $12.9 billion for $150 million of subscription revenue. It's paying to protect the AI computing demand that doesn't depend on the hyperscalers. |
The company just showed it can afford make this investment – after a blockbuster earnings report. |
· Revenue at $96.2 billion, up 106% from a year ago |
· Data center revenue was $89 billion, up 117% |
· Quarterly guidance of $108 billion against a $104 billion consensus |
CFO Colette Kress told analysts to expect roughly 70% revenue growth next fiscal year — well above the 45% Wall Street had modeled. |
The stock jumped 8.7% Thursday to a record close of $227.98. |
Even after that move, shares trade around 24 times this year's expected earnings. If Kress is right about next year, the forward multiple falls to the mid-teens. |
I own Nvidia and remain incredibly bullish. |
Nvidia could earn windfall profits with the upcoming IPOs of Anthropic and OpenAI. And early investors who act now can secure a stake before IPO day. |
Simply go here for details. |
Ian Wyatt
Editor, Daily Profit |
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