Microsoft should buy Hugging Face

Microsoft Corp. should acquire Hugging Face Inc., the AI community platform often called the GitHub of AI, argues Alex Kantrowitz in the Cautious Optimism newsletter, noting Microsoft's existing ownership of GitHub positions it to own AI distribution as the next major tech play. The recommendation comes amid a wave of AI-related earnings reports from Nvidia Corp., CrowdStrike Holdings Inc., and others, and follows a U.S.-Canada trade war escalation.

Microsoft should buy Hugging Face It already owns GitHub. Why not own the AI-era's GitHub, too? Welcome to . Cautious Optimism https://www.cautiousoptimism.news/ , a newsletter on tech, business, and power. Modestly upbeat Monday. The United States and Canada are back in a trade war https://www.cnn.com/2026/08/21/economy/us-canada-trade . A waste of economic growth and NATO unity. Speaking of NATO, there’s a new push to bolster European competitiveness with tech roots https://www.rhinegroup.eu/ , which is welcome. In better news, Intuit, Zoom, and nCino report earnings on Tuesday; Nvidia, CrowdStrike, Veeva, Okta, and Nutanix report Wednesday; and we’ll hear from Marvell, Autodesk, Workday, Affirm, Rubrik, SentinelOne, and BiliBili on Thursday. Today, we’re talking about Instinct, Poolside, and why buying AI distribution is the new hot play. Let’s go — Alex 📈 Trending Up: Not being able to afford Fable https://www.ft.com/content/5ee49718-c258-4f01-aa32-7e5b76ae5245 … California-Paramount relations https://www.nytimes.com/2026/08/24/us/california-bonta-paramount-warner-settlement-talks.html?unlocked article code=1.71A.lEmH.QaJtwAVQ6Egt&smid=url-share … Walmart in India https://techcrunch.com/2026/08/22/two-years-after-launch-walmarts-flipkart-is-closing-in-on-indias-quick-commerce-leaders/ … AI jitters https://apnews.com/article/china-ai-jobs-unemployment-youth-a44bfac3488adba00d641a3ce0fab702 … Robotaxi https://finance.yahoo.com/markets/stocks/article/tesla-cybercab-to-launch-sept-3rd-as-robotaxi-bet-ramps-up-135557945.html ? … social media bans https://www.bloomberg.com/news/articles/2026-08-24/new-zealand-plans-social-media-ban-for-under-16s … post-Wildberries war https://www.bbc.com/news/articles/cg598yvrzpro … winning friends, influencing regulators https://www.bloomberg.com/news/articles/2026-08-24/shein-s-purchase-of-everlane-faces-us-national-security-review-mt6k4xb6 … robot funding rounds https://www.reuters.com/business/retail-consumer/xpeng-says-its-robotics-business-raised-over-900-million-first-funding-round-2026-08-24/ … extreme weather https://www.reuters.com/business/environment/china-evacuates-tens-thousands-rain-typhoon-narra-lashes-southwest-2026-08-24/ … India-Russia relations https://www.ft.com/content/be3c0c6c-0a65-4add-b675-7a5876f625be?syn-25a6b1a6=1 … UK-Ukraine relations https://www.theguardian.com/world/live/2026/aug/24/europe-ukraine-russia-war-kyiv-andy-burnham-volodymyr-zelenskyy-latest-news-updates … Arctic drilling https://www.reuters.com/business/energy/norway-will-drill-arctic-regardless-eus-position-says-energy-minister-2026-08-24/ … bullets to fight back https://www.reuters.com/world/europe/eu-approves-further-61-billion-ukraines-defence-2026-08-24/ 📉 https://finance.yahoo.com/news/servicenow-pledges-1-5bn-investment-110000403.html Trending Down: Ready cash https://www.bloomberg.com/news/articles/2026-08-24/softbank-plans-record-1-trillion-retail-bond-offering-in-japan … China’s moon mission https://www.politico.com/news/2026/08/23/china-postpones-lunar-launch-01046900 … ready cash https://www.cnbc.com/2026/08/24/alibaba-share-placement-drop-ai-hong-kong.html … the Hungarian deficit https://www.bloomberg.com/news/articles/2026-08-24/drought-and-energy-crunch-curb-hungary-s-budget-deficit-cuts … freedom of the press https://www.wsj.com/business/media/abc-local-station-move-draws-fcc-scrutiny-9f92c4cd?st=SRnZc6 … smuggling chips https://www.wsj.com/tech/taiwan-charges-nine-in-connection-with-smuggling-of-ai-servers-to-china-d1f72f47 … private property in Russia https://www.bloomberg.com/news/articles/2026-08-24/putin-allows-russia-to-take-over-poorly-protected-infrastructure Quote of the Day: Data centers “basically dug their own grave for the problem that’s been caused for them, and that’s why they got the backlash they deserve,” says Texas Gov. Greg Abbott, referencing the speed at which data center construction has proceeded sans local buy-in https://www.axios.com/2026/08/23/greg-abbott-texas-data-centers-ai-backlash . It’s incredible how quickly a once-Lefty talking point has become the national mood. This crisis of confidence will take more than a few goodwill gestures to reverse, and I think that public opposition to the tech elite’s goals will engender even more anti-democratic agitation from the cohort. Here’s more from the Texas GOP https://x.com/PatrickSvitek/status/2091875659958177899 . Killer Instinct We’re not even a year out from the dawn of the ‘Claw https://www.cautiousoptimism.news/openclaws-creator-has-sam-altman-in-a-pr-headlock/ , but since the personal agent hit the market, we’ve seen the rise of its rival Hermes, the release of Anthropic’s Cowork app, and OpenAI’s Codex. Today, people can choose from a host of manicured and DIY AI agents. Enter Instinct, a chat-media agent for individual use. The buzzy personal agent sports a Benchmark-esque https://www.benchmark.com/ corporate homepage https://instinct.co/ , and has earned plaudits from venture capitalists https://x.com/pitdesi/status/2090579987778937159 , venture capitalists https://x.com/KatieS/status/2091152514603422074 , and venture capitalists https://x.com/davidrgoldberg/status/2091292390153715731 . So many tech investors received early access to Instinct — and tweeted about it — that the product was criticized https://x.com/brexton/status/2091252606756680052 by other members of the industry https://x.com/zachtratar/status/2090618164694618170 for working too hard to gin-up investor interest. How does a largely unreleased product generate enough discourse to earn a second-wave of commentary attacking the first? By apparently being pretty damn incredible https://x.com/melodykoh/status/2090630103956898017 . Instinct manages to shine so brightly by taking some cool risks. All personal AI agents balance capability and safety. OpenClaw felt magical because it was light on guardrails and heavy on doing things for you. Instinct is similar on that front, and security concerns are already slowing its hype train, with users reporting that the system went rogue https://x.com/clairevo/status/2090929594690130009 , got phished https://x.com/anothercohen/status/2091251836917350512 , and generally failed to properly disclose how it uses and retains data. We’ll have to see what shape Instinct takes when it eventually launches broadly. But it seems clear that agents — be they the new Grok Bot or something from a startup — are still better at doing a range of tasks for users than they are at doing those tasks safely. That’s a massive opportunity for someone to fix. In the meantime, I’ll be in Codex. A rare cybersecurity miss Israeli cybersecurity startups have a pretty insane track record. Wiz was bought for $32 billion https://techcrunch.com/2026/03/11/google-completes-32b-acquisition-of-wiz/ ; CyberArk sold for $25 billion https://www.cnbc.com/2025/07/30/palo-alto-networks-cyberark-deal.html ; Armis got $7.75 billion https://www.reuters.com/legal/litigation/servicenow-buy-cybersecurity-startup-armis-775-billion-2025-12-23/ , and Cyera is now worth $12.0 billion https://www.cyera.com/press-releases/cyera-raises-600-million-at-12-billion-valuation-to-continue-building-the-trust-layer-for-the-ai-era . Snyk? $7.4 billion https://snyk.io/news/snyk-closes-196-5-million-series-g-funding-at-7-4-billion-valuation/ . The list goes on and on. Hence my surprise when Minimus https://www.minimus.io/ said it is shutting down. The secure image company’s founders previously built and sold cybersecurity startup Twistlock to Palo Alto Networks. Given their experience, capital, and knowledge of what it takes to win customers in the security space, you’d be forgiven for expecting the startup to go vertical like many of its peers. But Minimus apparently went kaput because it “failed to build enough commercial momentum in an increasingly crowded market,” CTech writes https://www.calcalistech.com/ctechnews/article/bj0s5ikdmx . The competition point is warranted. Cybersecurity startups raised $10.6 billion https://news.crunchbase.com/cybersecurity/solid-startup-venture-funding-growth-h1-2026/ in the first half of 2026, more than how much the sector was able to raise in late 2022, 2023, and 2024. Since 2025, investor interest in security startups has re-accelerated. Not shocking, given that AI is shaking up how companies build, deploy, and consume software. There’s more to secure than ever, before even taking into account Mythos and other hyper-capable AI models that may dissolve traditional digital security paradigms. Still, ample capital means lots of startups competing for the same deals, not to mention large public cybersecurity companies who don’t want to be disrupted, please and thank you. - If I had to choose one non-AI startup thesis to bet on today, keeping the post-AI world secure would be it. Why Nvidia bought Poolside When the odd $6 billion + $1 billion Nvidia-Poolside deal was announced last week, we found ourselves scratching our heads https://www.cautiousoptimism.news/making-sense-of-nvidias-rapid-fire-dealmaking/ . A non-exclusive license to the AI lab’s technology and offering 109 people jobs did not seem worth $6 billion. At the time, CO wrote that we failed “to understand precisely why Nvidia is spending so much money on Poolside’s technology,” unless the “company had a breakthrough” cooking. We were almost right. Subscribe to Cautious Optimism to unlock the rest. Become a paying subscriber of Cautious Optimism to get access to this post and other subscriber-only content. 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