IBM’s CEO Arvind Krishna, an outspoken proponent of AI's transformative potential, has substantiated his belief with a significant financial move. IBM recently participated in a massive $235 million funding round for AI startup Hugging Face, reflecting Krishna's prediction that AI could automate up to 50% of back-office jobs.
Krishna believes in AI's business potential
Arvind Krishna, IBM’s CEO, has been quite vocal about the impending impact of AI on business practices. Early this year, he opined in a Fortune commentary that employees and AI should work in unison. Justifying his stance, IBM has now invested in Hugging Face, a $4.5 billion AI startup. The dynamic AI firm recently secured $235 million in funding, with IBM playing a significant role in the funding round.
This isn’t IBM’s first encounter with Hugging Face. The two have been collaborating since May on a range of AI tools. IBM even contributed about 200 open AI models to Hugging Face’s platform, including a collaborative model with NASA, marking the space agency’s first open-source AI model. This partnership is indicative of IBM's belief in Hugging Face's potential and its commitment to advancing AI technology.
Hugging Face's industry prominence isn't just recognized by IBM. Alongside its association with IBM, Hugging Face also boasts partnerships with other major tech players like Microsoft and Amazon. These collaborations offer Hugging Face models to enterprise clients, further validating the startup’s credibility in the AI space. In particular, the Amazon partnership promises a future training version of its own model, Bloom, utilizing Amazon's Trainium chip.
The productivity boost from AI
Krishna is convinced that AI will revolutionize not just business operations, but workplace productivity as well. He believes that AI and machine learning can automate many of the mundane back-office processes prevalent in the workplace. As evidence, Krishna cites IBM’s human resources department where AI use enabled 50 workers to do the work previously handled by hundreds of HR managers.
Surging valuation for Hugging Face
Hugging Face's appeal is evident in its recent Series D funding round, which brought in $235 million. Notable participants included Google, Amazon, Nvidia, Intel, and Salesforce, in addition to IBM. After this funding round, the startup's valuation shot up to a staggering $4.5 billion, more than twice the $2 billion valuation it held during its last round in April 2022. This sky-high valuation is indicative of the robust investor appetite for leading AI enterprises.