Nvidia has agreed to acquire Hugging Face, the open-source AI model hub, for $12.9 billion, The Information reported Wednesday night. Business Insider separately cautioned that talks—which value the company at more than $13 billion—have not yet produced a signed agreement and could still unravel. Neither company responded to requests for comment, and Nvidia’s silence is itself unusual for a company that typically moves fast to knock down inaccurate reports.
The logic behind the deal is almost entirely defensive. Nvidia’s biggest customers—OpenAI, Google, Amazon, and Anthropic—are all building their own AI chips to reduce their dependence on Nvidia hardware. A thriving open-source ecosystem gives those customers alternatives to the closed labs, which keeps more of the market buying Nvidia GPUs. That’s the same reason Nvidia has already poured tens of billions into building its own open-source models. Hugging Face also gives Nvidia a path back into cloud computing after it reportedly scaled back its DGX Cloud business last year. The platform already helps developers rent computing power, and Nvidia has promised to cover tens of billions in cloud deals for customers. If those customers don’t use all their reserved capacity, Nvidia could sell the excess through Hugging Face.
Hugging Face CEO Clem Delangue has spent much of this year publicly aligned with Nvidia’s open-source push. On CBS’s “Face the Nation” earlier this month, he said Hugging Face used an Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack, and he pointed to a letter signed by Nvidia CEO Jensen Huang and 24 other companies urging Washington to support open models rather than restrict them. In a CNBC interview in late July, Delangue warned that China is “clearly dominating” open-source AI.
The price marks a nearly threefold jump from Hugging Face’s $4.5 billion valuation in 2023, when it raised $235 million from Salesforce Ventures, Alphabet’s GV, IBM Ventures, and Nvidia itself. The company turned down a $500 million investment from Nvidia late last year that would have valued it at $7 billion, reportedly because it didn’t want a dominant investor swaying its decisions. A full acquisition removes that particular tension—you don’t cede control when you sell outright. But the $150 million in annual revenue Hugging Face was recently generating makes a $13 billion price tag roughly an 85x revenue multiple, which is aggressive even by AI’s inflated standards. Then again, Nvidia isn’t buying a revenue stream. It’s buying insurance on its chip monopoly, and at $12.9 billion, that might look cheap compared to the alternative.
