Nvidia to buy Hugging Face for $12.9B in major open-source AI bet: report

Nvidia has agreed to acquire Hugging Face, a leading repository for open-source artificial intelligence models and datasets, for $12.9 billion, The Information reported, citing a person familiar with the deal.

If completed, the transaction would rank among Nvidia's largest acquisitions and represent another major bet by CEO Jensen Huang on continued growth in AI demand.

The deal would give Nvidia control of a platform used by developers to build, share and download open-source AI models at a time when the industry is becoming increasingly competitive.

It would also deepen Nvidia's involvement in an area that could shape the next phase of the AI market as developers seek alternatives to closed systems operated by companies such as OpenAI and Anthropic.

Nvidia and New York-based Hugging Face have not yet commented on the report.

A steep valuation for Hugging Face

The reported $12.9 billion price tag would represent a substantial increase from Hugging Face's most recent private-market valuation.

Nvidia was among investors, including Salesforce and Alphabet, that participated in a $235 million funding round for Hugging Face in 2023, valuing the company at $4.5 billion.

The Information reported earlier this week that Hugging Face was generating annualized revenue of about $150 million, making the reported acquisition price particularly significant relative to its current sales.

The Financial Times reported in January that Hugging Face had rejected a $500 million investment from Nvidia last year that would have valued the company at $7 billion.

The latest reported price would therefore represent a considerable premium to the valuation Nvidia was previously considering.

Nvidia seeks to defend its AI ecosystem

The acquisition would come as Nvidia faces a growing threat from some of its biggest customers.

OpenAI, Google, Amazon and Anthropic are all developing or deploying their own AI chips to reduce their reliance on Nvidia's graphics processing units.

As AI developers gain more control over their hardware stacks, Nvidia's dominance of the market could face increasing pressure.

Hugging Face could provide Nvidia with a way to strengthen the broader ecosystem around its chips.

The platform hosts a huge collection of open-source models and datasets, giving developers an alternative to proprietary AI systems.

A larger open-source ecosystem could ultimately support continued demand for Nvidia's hardware by encouraging more developers and businesses to build AI applications without relying exclusively on closed platforms.

Nvidia has already invested billions of dollars across the AI industry, including backing companies such as OpenAI.

Potential return to cloud computing

The acquisition could also give Nvidia another route into cloud computing.

The company reportedly scaled back its DGX Cloud business about a year ago.

Hugging Face, however, already helps developers deploy and run AI models using rented computing infrastructure.

Owning that platform could allow Nvidia to participate more directly in AI cloud services without having to build an ecosystem from scratch.

The deal would also come shortly after Nvidia signaled confidence in the broader AI spending cycle.

The company has forecast a 70% increase in revenue next fiscal year and said it has $18 billion committed to equity investments through fiscal 2027.

For Nvidia, the reported acquisition is therefore about more than adding another AI company to its portfolio.

It could strengthen its position across models, developers, computing and cloud infrastructure as competition intensifies throughout the AI industry.

The reported deal also comes about a month after Hugging Face experienced a security incident involving an OpenAI model that went rogue and compromised parts of its infrastructure.

Founded in 2016, Hugging Face has become one of the most prominent hubs for open-source AI development.

Its acquisition would give Nvidia a significant foothold in a rapidly expanding segment of the technology market and potentially provide another layer of protection for its position at the center of the AI boom.