Nvidia’s $12.9 Billion Hugging Face Deal Could Reshape Open Source AI

Nvidia is reportedly moving to acquire Hugging Face in a deal that would value the open-source artificial intelligence platform at around $12.9 billion, according to reporting from The Information. A separate report from Business Insider said the discussions had not yet produced a signed agreement and that the agreement could still change.

The potential acquisition would bring together Nvidia, the leading supplier of AI computing hardware, and Hugging Face, one of the most widely used platforms for developers to share, access, and build with open-source AI models.

Founded in 2016, Hugging Face has become a central hub for open-source machine learning tools and models. For Nvidia, gaining control of the platform could expand its influence across the software side of AI while strengthening its relationship with developers building AI systems outside closed platforms.

Nvidia looks to deepen its role in open-source AI.

The possible deal comes as major AI companies increasingly develop their own custom chips to reduce dependence on Nvidia hardware. OpenAI, Google, Amazon, and Anthropic have all explored alternatives or internal chip strategies as demand for AI computing continues to grow.

A larger open-source AI ecosystem could help maintain demand for Nvidia’s processors by giving developers and businesses more options beyond closed AI platforms. Nvidia has already invested heavily in open source AI models as part of its broader AI strategy.

Hugging Face CEO Clem Delangue has publicly supported open models and aligned with efforts calling for the continued development of open-source AI. In a letter signed by Nvidia CEO Jensen Huang and other companies, supporters urged policymakers to support open models rather than restrict them.

The letter highlighted the ongoing debate over open-weight AI models and their role in global AI competition. The open models letter included support from multiple technology companies.

Hugging Face could expand Nvidia’s cloud strategy.

The acquisition could also strengthen Nvidia’s position in cloud computing. Hugging Face already helps developers run AI models using rented computing resources, which could give Nvidia a way to connect its hardware ecosystem with a broader developer community.

The move follows changes to Nvidia’s own cloud efforts. Reports indicated that Nvidia adjusted its DGX Cloud strategy, focusing on other parts of its AI infrastructure business.

Owning Hugging Face could also help Nvidia manage unused cloud capacity from large infrastructure commitments. The company has committed significant resources to securing computing capacity for customers, and a larger Hugging Face ecosystem could create additional demand.

Hugging Face valuation jumps with reported deal.

The reported acquisition price would represent a major increase from Hugging Face’s last publicly known valuation. The company raised $235 million in 2023 at a $4.5 billion valuation, with participation from investors including Salesforce Ventures, Alphabet’s GV, IBM Ventures, and Nvidia.

Hugging Face previously rejected a reported Nvidia investment offer that would have valued the company at $7 billion, according to Financial Times reporting. At the time, the company reportedly wanted to avoid giving a single investor significant influence over its decisions.

The company has grown rapidly but remains relatively small compared with major AI infrastructure providers. Reports said that Hugging Face was generating around $150 million in annual revenue and was moving closer to profitability.

A completed acquisition would give Hugging Face access to Nvidia’s larger financial resources while allowing Nvidia to strengthen its presence across AI hardware, software, and developer ecosystems.