Nvidia reportedly agrees to buy Hugging Face for $12.9 billion

Nvidia has reportedly agreed to acquire Hugging Face, a leading hub for open-source artificial intelligence, for $12.9 billion. According to reports from The Information, the transaction would value the company at more than $13 billion, although talks have not yet resulted in a signed agreement. Business Insider noted that the deal could still collapse, and neither Nvidia nor Hugging Face has responded to requests for comment to confirm the status of the negotiations.

The acquisition represents a significant jump from Hugging Face’s last known valuation of $4.5 billion in 2023. At the time, the company raised $235 million in a funding round led by Salesforce Ventures, with participation from Alphabet’s GV, IBM Ventures, and Nvidia itself. This proposed purchase price is also considerably higher than a $500 million investment offer from Nvidia late last year, which Hugging Face rejected to avoid having a dominant investor sway its decisions.

Strategically, the move is designed to protect Nvidia’s dominance in AI chips. Major closed-source AI labs, including OpenAI, Google, Amazon, and Anthropic, are currently developing their own hardware to reduce reliance on Nvidia. By securing a thriving ecosystem of open-source models, Nvidia aims to provide customers with alternatives to these closed systems, thereby keeping more of the market dependent on its hardware.

The deal would also mark a comeback for Nvidia in the cloud computing sector. The company reportedly scaled back its own cloud business, DGX Cloud, about a year ago. Owning Hugging Face, which helps developers run AI models using rented computing power, offers Nvidia a pathway back into the market without starting from scratch. Additionally, the acquisition provides a financial safety net; Nvidia has promised to cover costs for tens of billions of dollars in cloud deals for its customers. If those customers do not use all the signed-up capacity, Nvidia could resell the unused computing power to Hugging Face’s customers.

Hugging Face’s CEO, Clem Delangue, has spent much of this year publicly aligning with Nvidia’s open-source initiatives. In a recent letter co-signed by Nvidia CEO Jensen Huang and 24 other companies, Delangue urged the U.S. government to support open models rather than restrict them. This stance comes as Washington officials weigh potential restrictions on open-weight models following the release of competitive Chinese AI systems.

Financially, Hugging Face is generating approximately $150 million in annual revenue, up from roughly $100 million two months prior, and is close to profitability. While the price represents a massive multiple for a company of this size, the deal would provide Hugging Face access to Nvidia’s deeper pockets. This is particularly relevant as other AI infrastructure competitors are being absorbed, such as Stripe’s recent acquisition of OpenRouter for more than $7 billion.