Nvidia Nears $12.9B Hugging Face Acquisition in Bid to Own Open AI's Home Turf

Nvidia has agreed to buy Hugging Face for $12.9 billion, The Information reported Wednesday night, citing a source familiar with the matter. Business Insider, which first reported over the weekend that Hugging Face was fielding takeover interest, added that the talks — which would value the company at more than $13 billion — had not yet produced a signed agreement and could still fall apart. Neither Nvidia nor Hugging Face has commented publicly.

If the deal closes, it would be one of the largest acquisitions in the history of the AI industry — and one of the most strategically loaded.

What Hugging Face Is — and Why It Matters

Hugging Face, founded in 2016, is the closest thing the AI world has to a public square. It is the most popular hub where developers share, download, and iterate on open-source AI models, datasets, and tooling. For hundreds of thousands of engineers and researchers, “the Hub” is simply where AI work begins: you browse for a model, pull its weights, and build.

That position is exactly what makes it valuable to Nvidia. Buying Hugging Face gives the chipmaker a strong foothold in the world of open-source AI, right as open-source developers are doing their level best to catch up to closed systems from Anthropic, OpenAI, and Google.

The Strategic Logic: Defending the Moat

Why would a chip company spend nearly $13 billion on a model repository? The most obvious answer is protecting its dominance in AI silicon — which, from the outside at least, appears increasingly at risk, even with Nvidia’s aggressive chip-release schedule.

Pretty much all of the biggest closed-source AI labs are now building their own AI chips to lessen their reliance on Nvidia. OpenAI is developing custom silicon (its “Jalapeño” inference chip has already been benchmarked publicly). Google has its TPUs. Amazon has Trainium and Inferentia. Anthropic has locked in massive compute deals across multiple suppliers.

A thriving ecosystem of open-source AI models gives customers more alternatives to those closed labs — and open models overwhelmingly run on Nvidia hardware, from DGX systems down to GeForce cards and Jetson edge modules. Keeping the open ecosystem strong keeps more of the market dependent on Nvidia. It is also why Nvidia has already poured tens of billions of dollars into building and supporting its own open-source AI models.

A Comeback Vehicle for Nvidia’s Cloud Ambitions

The deal would also mark something of a comeback for Nvidia in cloud computing. Nvidia reportedly scaled back its own cloud business, DGX Cloud, about a year ago. But according to The Information, 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 is 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 end up not using all the compute they signed up for, Nvidia could get stuck holding the capacity. Owning Hugging Face would give Nvidia a ready-made marketplace to resell that unused capacity to Hugging Face’s enormous developer base.

Why Hugging Face Would Say Yes Now

The price marks a huge jump from Hugging Face’s last known value. The company raised $235 million in 2023 in a round that valued it at $4.5 billion — led by Salesforce Ventures, with participation from Alphabet’s GV, IBM Ventures, and Nvidia itself. A deal near $13 billion is nearly triple that.

This would not be Hugging Face’s first brush with an Nvidia offer, either. Hugging Face turned down a $500 million investment from Nvidia late last year that would have valued it at $7 billion, the Financial Times previously reported. At the time, the company said it did not want a dominant investor that could sway its decisions.

Why say yes to a full buyout now? A buyout is arguably different from taking on one giant backer — a scenario that often means ceding partial control while still being pressured to keep growing independently.

Hugging Face is also 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 — fast growth that has brought the company “close to profitability,” as CEO Clem Delangue told TechCrunch last month. Still, a price near $13 billion is a massive multiple for a business of that size, and hard for any board to resist.

Finally, the deal would give Hugging Face access to Nvidia’s much deeper pockets just as AI infrastructure competitors get absorbed into bigger outfits — Stripe recently agreed to acquire OpenRouter, an AI model-routing startup valued at $1.3 billion in May, for a reported $7 billion-plus.

The Open-Source Politics in the Background

Should we be surprised that Hugging Face’s days as an independent outfit appear numbered? Not really. Delangue has spent much of this year publicly aligned with Nvidia’s open-source push, amid a debate that has been building for months as Washington officials reportedly weighed restrictions on open-weight models.

Chinese labs like Moonshot AI have released systems — such as its Kimi K3 model — that match leading U.S. models on benchmarks while costing far less to run, and talk of competitive and national-security concerns grew in Washington as a result. Critics of closed labs, like White House advisor David Sacks, suggested those fears were being fanned by the “duopoly” of Anthropic and OpenAI.

On CBS’s “Face the Nation” earlier this month, Delangue revealed that Hugging Face used an Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack, and pointed to a recent 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. In a late-July CNBC interview, he made similar points, warning that China is “clearly dominating” open-source AI.

An Nvidia-owned Hugging Face would place the de facto home of open AI directly inside the empire of the company with the most to gain from open models winning.

What to Watch

The deal is not signed. Watch for: official confirmation from either company, regulatory scrutiny given Nvidia’s already sweeping AI investments, community reaction over neutral-host concerns, and whether Hugging Face’s model hub policies change if the acquisition closes. For now, the open-source world is watching its town square negotiate its lease.