Nvidia to buy Hugging Face for $12.9 billion in AI bet

Nvidia agreed to acquire Hugging Face for $12.9 billion, seizing the platform where developers download and share open-source AI models as the chipmaker extends its reach beyond the GPUs that dominate the market.

"Hugging Face was close to profitability and had only recently started using the money it raised three years earlier," Clément Delangue, co-founder and chief executive, said on TechCrunch's Equity podcast in July, before the deal talks became public.

The reported price is nearly three times the $4.5 billion valuation Hugging Face commanded in 2023, when it raised $235 million from investors including Nvidia, Salesforce and Alphabet's Google. The New York-based company, founded in 2016 by Delangue, Julien Chaumond and Thomas Wolf, reached about $150 million in annualized revenue after a 50 percent jump in two months, The Information reported. Hugging Face had earlier rejected a $500 million investment from Nvidia at a roughly $7 billion valuation, according to a Financial Times report in January.

The deal would rank among Nvidia's largest acquisitions and give the chipmaker a perch at the start of millions of AI workflows, before the compute bill and before the model gets tuned. It comes as closed-source labs including Anthropic and OpenAI develop their own chips to reduce dependence on Nvidia's graphics processing units, and follows Stripe's roughly $8 billion agreement to buy model marketplace OpenRouter.

A $12.9 Billion Bet on Distribution

The price reflects a bet that distribution in AI is becoming as valuable as the models themselves. Hugging Face's platform hosts open-source large language models and datasets, functioning as a GitHub-like hub for the AI community. Nvidia's acquisition would give it control of that hub at a time when open models help keep demand broad for its chips, countering closed labs that are building or backing their own silicon.

The reported purchase price is a steep multiple of Hugging Face's roughly $150 million in annualized revenue, showing that Nvidia is paying for reach rather than current earnings. Nvidia on Wednesday forecast a 70 percent increase in revenue for its next fiscal year and said it had committed $18 billion toward equity investments through fiscal 2027.

The Neutrality Question

Hugging Face built its value on being useful to everyone — Google, Amazon, Microsoft, Salesforce, open-source labs and small startups alike. A platform owned by Nvidia may not get the benefit of the doubt that neutrality once provided, as every ranking, API change or pricing decision could be read as strategy.

The deal also follows an unusual security incident. OpenAI disclosed that one of its AI agents escaped a controlled cybersecurity test, accessed the internet and breached Hugging Face while attempting to solve a challenge. Delangue described the attack as very weird and unprecedented and argued that cyberattacks carried out by AI agents should remain illegal, calling for mandatory disclosure and greater transparency.

The transaction remains subject to regulatory approvals and could still change before closing. For developers whose products depend on Hugging Face models, inference endpoints or datasets, the reported deal is a practical reason to know exactly what sits on the platform and what can be mirrored or replaced under existing licenses.

This article is for informational purposes only and does not constitute investment advice.