Nvidia has agreed to acquire Hugging Face, the popular open-source AI model hub, for $12.9 billion, according to a report from The Information published Wednesday night. The deal, which would value the company at more than $13 billion, is not yet signed and could still collapse, the report said, citing a source familiar with the matter. Business Insider first reported over the weekend that Hugging Face was fielding takeover interest.
Neither Nvidia nor Hugging Face has responded to requests for comment. Nvidia’s silence is notable, as the company has historically moved quickly to correct reports it considers inaccurate.
Also read: Ex-Meta Researchers Launch Isaac 0.5 to Give Factory Robots Flexible Vision
Hugging Face, founded in 2016, has become one of the most important platforms for developers to share and download open-source AI models. Acquiring it would give Nvidia a strong foothold in the open-source AI world at a time when open-source developers are working to catch up with closed AI systems from companies like OpenAI and Anthropic.
Why Nvidia Wants an Open-Source AI Hub
The strategic rationale centers on protecting Nvidia’s dominance in AI chips. The company’s largest closed-source AI customers — including OpenAI, Google, Amazon, and Anthropic — are all developing their own custom AI chips to reduce their reliance on Nvidia hardware. A thriving open-source AI ecosystem gives developers and enterprises more alternatives to those closed labs, which in turn keeps more of the market dependent on Nvidia’s chips.
Also read: Robot brain builders are pushing out of their GPT-2 era
This isn’t a new strategy for Nvidia. The company has already invested tens of billions of dollars in building its own open-source AI models. The Hugging Face acquisition would extend that push by giving Nvidia direct access to the community and infrastructure where those models are shared and deployed.
Hugging Face CEO Clem Delangue has spent much of this year publicly aligning with Nvidia’s open-source stance. In an appearance on CBS’s “Face the Nation” earlier this month, Delangue said Hugging Face used an Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack. He also pointed to a letter signed by Nvidia CEO Jensen Huang and 24 other companies, including Hugging Face, urging the U.S. government to support open models rather than restrict them.
The open-source debate has intensified as Chinese labs like Moonshot AI released systems such as its Kimi K3 model that matched leading U.S. models on benchmarks while costing significantly less to run. Washington officials have reportedly weighed restrictions on open-weight models, with some critics of closed labs — including White House advisor David Sacks — suggesting the fears were being fanned by the “duopoly” of Anthropic and OpenAI.
A Comeback in Cloud Computing
The deal would also mark a return for Nvidia in cloud computing. Nvidia reportedly scaled back its DGX Cloud business about a year ago. Owning Hugging Face, which already helps developers run AI models using rented computing power, could give Nvidia a way back into that market without starting from scratch.
There’s also a financial safety net at play. Nvidia has promised to help cover the cost of tens of billions of dollars in cloud computing deals for its customers. If those customers don’t use all the computing power they signed up for, Nvidia could be left with unused capacity. Hugging Face’s customer base would give Nvidia a ready-made channel to sell that excess capacity.
The $12.9 billion price tag marks a massive jump from Hugging Face’s last known valuation. The company raised $235 million in 2023 in a funding round led by Salesforce Ventures, with participation from Alphabet’s GV, IBM Ventures, and Nvidia itself, valuing it at $4.5 billion.
This isn’t the first time Nvidia has approached Hugging Face. The company turned down a $500 million investment offer from Nvidia late last year that would have valued it at $7 billion, the Financial Times previously reported. Hugging Face said at the time it didn’t want a dominant investor that could sway its decisions.
What a Buyout Means for Hugging Face
A full acquisition is different from taking on one giant backer, which often means ceding control while being pressured to continue growing. Hugging Face is still a comparatively small business by revenue. The Information reported it was recently generating about $150 million a year in revenue, up from roughly $100 million just two months earlier. That growth has enabled the company to get “close to profitability,” Delangue told TechCrunch last month.
Still, a price near $13 billion would be a massive multiple for a company of this size and hard to resist. The deal would also give Hugging Face access to Nvidia’s much deeper pockets just as other AI infrastructure competitors start to get absorbed into larger outfits. Stripe’s recent deal to acquire OpenRouter, a startup that helps customers select different AI models, for more than $7 billion underscores the consolidation trend in the AI infrastructure space.
The acquisition, if finalized, would reshape the open-source AI market and give Nvidia a central role in the distribution of AI models. For now, the deal remains in flux, and both companies have stayed silent on the reported agreement.
This article is for informational purposes only and does not constitute financial advice. The technology and AI markets are volatile and subject to rapid change; readers should conduct their own research before making investment decisions.
