It’s a match made in momentum trade heaven: AI’s biggest infrastructure provider is about to get its hands on AI’s biggest collection of open-source roadmaps.

On Thursday, Nvidia confirmed reports that it would acquire Hugging Face, a.k.a. “The GitHub of AI,” in a deal valued at a whopping $13 billion. It’s the latest (and perhaps greatest) expression of Nvidia’s strategy to promote an open-source AI ecosystem. “Open models strengthen safety and cybersecurity, accelerate innovation and diffusion, and enable sovereignty,” Nvidia CEO Jensen Huang said in an X post announcing the deal.

An Offer They Can’t Refuse

Nothing stays the same for long in the AI world. According to sources who spoke to the Financial Times for a story in January, Hugging Face last year rejected a $500 million investment offer from Nvidia, a cash infusion that would’ve come with a $7 billion valuation and amounted to more than the start-up had raised in its more than 10-year history. But the company told the FT it did not want to exist under the influence of a single “dominant” investor. By this summer, the deal tables had turned, and it was Hugging Face that approached Nvidia, Hugging Face CEO Clément Delangue said on CNBC’s Squawk Box on Thursday.

So what changed? First, the company employed open-source AI models to ward off a swarm of rogue (and proprietary) OpenAI agents that were trying to access the vast Hugging Face repository of open-source AI models, applications and datasets. Then, “we realized that Hugging Face and open source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility,” Delangue said. Nothing pushes an indie developer into the open arms of Big Tech like a cyberattack ripped straight out of Neuromancer.

For Nvidia, the deal marks another salvo in a simmering cold war with its biggest clients:

• By pushing cheaper open-source models, Nvidia can pull value away from expensive proprietary models like Anthropic’s and OpenAI’s and toward its own hardware, analysts told The Daily Upside. That may dent the resources that major models could use to develop their own in-house chips to replace Nvidia.
• And as its biggest customers increasingly develop their own in-house chip designs, open-source could help Nvidia diversify its customer base. “Open models let startups, businesses, universities and public institutions build on advanced capabilities without training every model from scratch,” Huang said Thursday.

Carolina on My Mind: The Hugging Face acquisition wasn’t Nvidia’s only win this week. Huang also attended a summit at the Chapel Hill campus of the University of North Carolina, where AI industry leaders successfully lobbied representatives from G20 nations to back a light-touch AI regulatory framework dubbed The Carolina Principles. How’s that for a group hug?

For a job interview, it’s good to be early. When it comes to claiming Social Security, not so much.

Claiming Social Security before one’s full retirement age meaningfully and permanently reduces the benefit, while waiting until age 70 has the opposite effect, boosting monthly checks by more than 70% compared with claiming at 62. Despite the attractive math, many late-career workers say they want to claim as early as they can, and the reason why has less to do with needing the cash flow and more to do with worrying about the program’s weak financial footing. Simply put, people feel like they need to get their hands on the money while it’s still there.

That’s the key finding of a new survey from the National Association of Registered Social Security Analysts among its members. Respondents said nearly three in four clients want to claim early out of fear of future benefit changes or reductions, based at least in part on the faulty assumption that benefits already in payment will somehow be “grandfathered in” and protected from potential cuts. That’s just not true, according to NARSSA president Martha Shedden, and it’s critical for advisors and other financial service providers to cut through the noise.

Fear Factor

“Registered Social Security analysts work very closely with the public on their claiming decisions, so they’re in a good position to identify worrying trends like this,” Shedden told Retirement Upside. “These results show how strongly fear and confusion are influencing one of the most important retirement decisions people will ever make.”

Other findings underscore the issue:

• About six in 10 clients doubt Congress will fix the federal entitlement program before insolvency in 2032 or 2033.
• The same proportion reported feeling overwhelmed by conflicting advice about claiming, while 45% want a simple answer on the best age to claim.

“That also worries me, because this is not a simple decision, and the presence of conflicting advice clearly doesn’t help,” Shedden said. “Americans aren’t necessarily claiming Social Security early because it is the best financial decision for them. They’re claiming based on misunderstandings and uncertainty about the program’s future.”

The Advisor Angle. While its members were initially tax professionals and financial advisors, the ranks of the NARSSA have grown far more diverse over the past decade, now including insurance agents, mortgage agents, senior care facility managers, attorneys and more. So, if financial advisors aren’t talking with clients about these Social Security topics, someone else probably is.

“The survey is yet another piece of evidence that people need guidance about retirement income planning in general,” Shedden said. “They often don’t know how they can best use the funds they have to fund their retirement. Social Security is the foundation for many people, but it’s only one piece of the puzzle.”

Who remembers the psychological thriller Memento from the year 2000?

Like the Christopher Nolan film’s central character, who has anterograde amnesia and thus cannot make long-term memories, a suite of proposed exchange-traded funds would reset hourly. Last month, Defiance ETFs filed with the Securities and Exchange Commission for 16 2x-leveraged funds that, unlike existing products in the category that reset daily, would have six “intraday execution periods,” focused on popular single stocks like SpaceX, Meta and Palantir, as well as the Roundhill Memory ETF (DRAM). While that could resonate with day traders who are quite serious about watching the clock, the strategy seems to be a different way of approaching the SEC’s 2x limit on leverage for new funds.

“They’re trying to get around concerns the SEC has expressed around higher leverage,” said Benjamin Schiffrin, director of securities policy for Better Markets. “It’s fair to say this is risky, if not riskier, than an ETF that is 5x leveraged but in a different wrapper.”

Cut It in Half and Double It

Leveraged single-stock ETFs are notorious, and sought out, for their volatility. Issuers are clear, at least in fund documents, that the products are intended to be traded intraday by experienced investors. That’s because the losses can add up and are difficult to recover from, a quality known as decay. If, for example, a stock loses 20% in a day, then fully recovers the next, investors who held a leveraged single-stock fund during that time frame will end up with less money than they started with. Adding reset periods throughout the day would make it that much more critical for traders to get in and out of the funds quickly.

“These ETFs are designed for short-term traders who actively manage their positions throughout the day,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “Because they reset multiple times throughout the trading day, they carry greater compounding risk than traditional daily-reset leveraged ETFs.” Or, as TradingBlock vice president of market strategy Michael Martin said, volatility requires bigger moves to break even.

“Intraday volatility runs hotter than close-to-close volatility in these [stock] names, and the filing says so,” he and Chief Innovation Officer Michael Rechenthin said in comments to ETF Upside. “You lose 50%, you have to make 100%. Six resets a day gives that math more chances to run.”

As trading tools, leveraged ETFs have helped some people achieve outsized returns, but many funds have lost money, which highlights the problem for buy-and-hold investors:

• The median fund return was -38% over four years, per a report from Morningstar.
• Meanwhile, the median trading volume was 22%, meaning that investors largely held positions longer than a day, the report found.

Short-Term Memory: Defiance did not respond to a request for comment about the proposed funds. But whether the SEC decides to hold up the funds is a big question: The regulator is currently collecting public comments about “novel” ETFs with strategies that resemble gambling, and some issuers appear hopeful that it will eventually overturn its 2x leverage limit. “The SEC probably will have concerns similar to the concerns they had with 5x leveraged single stock ETFs,” Schiffrin said. “It’s just not clear that retail investors are going to appreciate how quickly you can lose your money.”