Nvidia has agreed to buy Hugging Face for $12.9 billion, The Information reported Wednesday night, a deal that would put the largest open-source AI model hub under the world's largest AI chipmaker. The transaction values Hugging Face at more than $13 billion, nearly triple the $4.5 billion mark it carried after a $235 million round in 2023. Neither company has confirmed the report, and Business Insider noted that a signed agreement had not yet been reached.
The price is a striking reversal of terms. Late last year, Hugging Face turned down a $500 million investment from Nvidia at a $7 billion valuation, telling the Financial Times it did not want a dominant investor that could sway its decisions. A full buyout at roughly double that valuation reframes the calculus — Hugging Face gives up independence but avoids the pressure of a controlling minority holder while gaining access to Nvidia's balance sheet.
Hugging Face, founded in 2016, is the default location where developers share and download open-source models. The company was recently generating about $150 million in annual revenue, up from roughly $100 million two months earlier, and CEO Clément Delangue told TechCrunch last month it was close to profitability. Nvidia participated in the 2023 round alongside Salesforce Ventures, Alphabet's GV, and IBM Ventures.
Key facts
- 01Nvidia agreed to buy Hugging Face for $12.9 billion, valuing the company at more than $13 billion.
- 02The price is nearly triple the $4.5B valuation Hugging Face carried after its $235M round in 2023.
- 03Hugging Face turned down a $500M investment from Nvidia at a $7B valuation late last year.
- 04Hugging Face is generating about $150M in annual revenue, up from roughly $100M two months earlier.
- 05Nvidia shares rose 4% in after-hours trading Wednesday following its earnings report.
The strategic logic runs through Nvidia's chip business. OpenAI, Google, Amazon, and Anthropic are all building their own AI silicon to lessen their dependence on Nvidia GPUs. A thriving open-source ecosystem — where developers can run any model on any hardware — keeps more customers on Nvidia chips than a world dominated by a handful of closed labs with their own accelerators.
“I think Nvidia is very much a community, a platform-based company, and in that respect, I think Hugging Face fits perfectly within that. There is this five-layer cake from Nvidia, and foundational models are one of them.”— Siddy Jobe, Fund manager at Eonopolis Exponential Technologies
News of the deal follows Nvidia's earnings on Wednesday, which sent the stock up 4% in after-hours trading. The company has moved aggressively across the AI stack in the past year, including a $20 billion licensing deal with chip startup Groq. Owning Hugging Face would also revive Nvidia's cloud ambitions after it scaled back DGX Cloud about a year ago — the platform already helps developers rent compute to run models, which gives Nvidia a distribution channel for the tens of billions of dollars in cloud capacity it has committed to backstop for customers.
Delangue has spent much of this year publicly aligned with Nvidia's push against restrictions on open-weight models. On CBS's Face the Nation earlier this month, he pointed to a letter signed by Nvidia CEO Jensen Huang and 24 other companies, including Hugging Face, urging Washington to support open models rather than restrict them. In a separate CNBC interview in late July, he said China was clearly dominating open-source AI, citing releases like Moonshot AI's Kimi K3 model.
The cybersecurity angle has also drawn Delangue and Nvidia closer. Hugging Face was recently at the center of a hacking incident that Delangue blamed on engineering mistakes; he said the company used an Nvidia-modified version of a Chinese open-source model to resolve it.
“AI cybersecurity is going to become a huge market in the U.S. and in the world.”— Clément Delangue, Hugging Face CEO
The deal fits a broader consolidation pattern in AI infrastructure. Stripe paid more than $7 billion earlier this month for OpenRouter, a startup founded in early 2023 that helps customers route queries between different AI models. OpenRouter was valued at just $1.3 billion during its Series B round in May, meaning Stripe paid roughly a 5x step-up in three months. Independent AI middleware companies are being bid up quickly as strategic buyers move.
Skepticism about the transaction is warranted until it closes. Business Insider reported that talks had not yet produced a signed agreement and could still fall apart. A $12.9 billion price is a rich multiple against $150 million in revenue, and antitrust regulators in the US and EU are likely to scrutinize a deal that gives the dominant AI chip supplier ownership of the dominant open-model distribution hub. Nvidia's silence — unusual for a company that has publicly pushed back on inaccurate reports in the past — has been read by some as tacit confirmation.
For Nvidia, buying Hugging Face is a defensive move dressed as an expansion. The company is not short of chip demand; it is short of leverage over what happens after the chips are sold. Controlling the layer where developers discover, benchmark, and deploy models means Nvidia can steer the open-source ecosystem toward workloads that favor its hardware roadmap, and can offer a distribution surface to soak up any cloud capacity its hyperscale customers fail to consume. If regulators let the deal through, the shape of the open-source AI market for the next several years gets decided inside one company.
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