For a dominant company, Nvidia acts a lot like an underdog. The latest sign comes from its $13 billion deal to buy Hugging Face, a maker of open AI models. Nvidia sees a fast-changing landscape for artificial intelligence, and it's wisely using its resources to stay on top.

Hugging Face is the main repository for "open weight" AI models, which are alternatives to the pricey proprietary models from OpenAI and Anthropic. In making the deal, Nvidia is looking for ways to keep the cost of AI models low, thus keeping demand for its chips white hot.

There are three basic ingredients to AI. The first is the hardware infrastructure-primarily servers and networking-where Nvidia is the pioneer and leader with projected data-center sales of $650 billion next year. Then there are the AI models, which are trained, and eventually run, on the infrastructure. Finally, there is software like chatbots and automated agents, which turn the outputs of models into conversations and actions.

Nvidia makes its money from the first ingredient, so it's in its interest that the other two are as inexpensive as possible. Cheaper AI will lead to more demand and more chip sales for Nvidia.

OpenAI and Anthropic leapt out to the forefront early on in the AI model race. Their proprietary models have constantly been the best, according to various benchmark ratings, and were the obvious choice for enterprises that were integrating AI into their workflows.

But as AI usage accelerated this winter, enterprises experienced sticker shock as they discovered that the costs of these closed models quickly added up. Customers are looking for ways to tame their AI spending even as usage skyrockets.

Enter open-weight models. Though some come with restrictions in commercial use, open-weight models are designed to be freely used by anyone, anywhere. Once the models themselves are free, the cost of AI comes down to the other two ingredients: the hardware infrastructure-Nvidia's moneymaker-and software.

While they still trail the top options from OpenAI and Anthropic, open- weight models have closed the performance gap considerably in recent months. Most of these free models come from government-subsidized Chinese companies, which adds a geopolitical twist to the story. In the U.S., Meta Platforms has released several generations of open-weight models.

Since 2023, Nvidia has been making its own open-weight models called Nemotron, but they have never matched the quality of the proprietary models from OpenAI and Anthropic. The good news is Nvidia has decades of experience building software ecosystems around its chips. It provides the software free of charge to sell more chips.

Now, Nvidia is thinking about free AI models to sell-you guessed it-more chips. In a July letter to policymakers, CEO Jensen Huang said that open-weight AI models "can expand opportunity, strengthen competition, extend American technological leadership, mitigate risk, and ensure that the benefits of this extraordinary technology are shared broadly across our economy."

They weren't empty words. The next month, Nvidia cut a deal with Poolside, an AI lab trying to compete with OpenAI and Anthropic that was running short on funding. According to The Wall Street Journal, Nvidia invested $1 billion in the start-up and added $6 billion to license Poolside's technology and hire over 100 of its employees. Nvidia is now sinking real money into the next version of Nemotron in an effort to bring it at least up to the level of the Chinese open-weight models.

Neither Nvidia nor Poolside have confirmed the deal.

Now it's adding Hugging Face in a deal that's scheduled to close next year if it gets past regulators. Hugging Face is the dominant distribution platform for open-weight models the way Microsoft's GitHub is for open software. Along with coming improved Nemotron models, the acquisition would give Nvidia the opportunity to invest in a broad ecosystem of free models that can run on its hardware infrastructure.

"As the opportunity for open models accelerates, Hugging Face can serve the global AI community at unprecedented scale," Huang said in a blog post this week. "Nvidia's infrastructure, engineering, and global reach can help improve platform reliability, safety, model evaluation, inference and deployment capabilities, while preserving the open ecosystem that made Hugging Face foundational."

Everyone benefits from cheaper intelligence, with two notable exceptions: OpenAI and Anthropic. As open alternatives proliferate and improve, the AI labs' proprietary models are coming under increasing pressure. OpenAI reduced prices across its GPT-5.6 model family in July and August, though Anthropic has yet to follow.

The interesting wrinkle is that the two model makers are big Nvidia customers. They are both growing at astounding rates, and Anthropic may soon go public with a market value of $2 trillion. Much of Nvidia's heralded revenue guide for next year-which reignited the stock-is predicated on these two companies. Nvidia also invested $30 billion into OpenAI this year.

But Nvidia isn't interested in becoming a junior partner to its biggest customers. Ultimately, Nvidia has one mission: increasing AI usage, thereby selling more chips and servers. The company is making the right moves to that end. It's one more reason to be bullish on the stock-and to worry about the future of OpenAI and Anthropic.