Nvidia (Nasdaq: NVDA) beat again. Revenue topped $96 billion, more than double a year ago, and the stock is up 9% since reporting. What lifted its shares? The CFO guiding for 70% revenue growth in 2028. But our analyst Emily Flippen calls Nvidia "a lagging indicator of the AI buildout, not a leading one." Its reported revenue just confirms spending that the market already knew about. But the more revealing news came Thursday, when Nvidia revealed what’s on its shopping list.
- The deal: Nvidia reportedly agreed to buy Hugging Face, the open-source hub where developers publish and test AI models, for about $13 billion. It's Nvidia's largest acquisition ever, at roughly 86 times the target's sales.
- Why that price isn't incredibly high: Nothing is expensive against Nvidia's scale. Flippen notes Nvidia could buy Hugging Face seven times over using cash already set aside to repurchase its own stock. She also flags this as a defensive hedge. Nvidia's biggest customers are starting to design their own chips. Whoever owns the platform developers download models from can steer them toward rival hardware. Nvidia is paying to keep that door shut.
We've recommended Nvidia more than 30 times and never sold. In fact, a $10,000 stake invested in 2005, when we first recommended Nvidia in Stock Advisor, is worth about $13 million today. But the build-out that made it can't grow forever, and this deal is a tell that Nvidia knows the easy years are behind it. What we're watching now is whether it can defend its lead as well as it once extended it.
