Nvidia Reportedly Moves Toward Hugging Face Acquisition

Nvidia has reportedly agreed to buy Hugging Face for $12.9 billion. The Information reported this Wednesday night. The report cited a source familiar with the matter. Business Insider first reported over the weekend that Hugging Face was fielding takeover interest.

On Wednesday night, the outlet added more detail. According to that report, the talks would value the company at more than $13 billion. However, no signed agreement had been reached yet. The deal could still fall apart entirely.

Both Nvidia and Hugging Face were contacted for comment earlier. Neither company has responded so far. Nvidia’s silence here is particularly notable. In the past, the company has moved quickly to address reports it considers inaccurate.

Why This Deal Makes Sense for Nvidia

In some ways, this deal feels inevitable. Hugging Face was founded back in 2016. It’s become one of the most popular hubs online. Developers use it to share and download open-source AI models. Acquiring it would give Nvidia something valuable. It would gain a strong foothold in open-source AI. This comes at a critical moment too. Open-source developers are working hard to catch up to closed AI systems. That includes systems from companies like Anthropic and OpenAI.

Why would Nvidia want this deal? The most obvious reason involves protecting its dominance. Nvidia leads the market in AI chips. That dominance appears increasingly at risk, at least from the outside. This holds true even with Nvidia’s aggressive chip-release schedule.

Nearly all major closed-source AI labs are now building their own chips. That includes OpenAI, Google, Amazon, and Anthropic. Each wants to reduce reliance on Nvidia specifically. A thriving open-source AI ecosystem changes the equation, though. It gives customers more alternatives beyond those closed labs.

This, in turn, keeps more of the market dependent on Nvidia’s hardware. That’s also why Nvidia has already invested tens of billions of dollars. Much of that funding has gone toward building its own open-source AI models.

Hugging Face’s Growing Alignment With Nvidia

Should this outcome surprise anyone? Not really, based on recent history. Hugging Face CEO Clem Delangue has spent much of this year aligned publicly with Nvidia. His comments came amid a broader debate building for months. Washington officials reportedly weighed restrictions on open-weight models during that time. Chinese labs, like Moonshot AI, had released competitive systems. That includes its Kimi K3 model.

That system matched leading U.S. models on benchmarks. It also cost significantly less to run. This sparked growing concern in Washington. Officials raised both competitive and national-security concerns. Some critics pushed back on this narrative, though. White House advisor David Sacks suggested these fears were being amplified. He pointed to what he called the “duopoly” of Anthropic and OpenAI.

Delangue addressed this topic directly during a CBS appearance. On “Face the Nation” earlier this month, he shared a specific example. He said Hugging Face used an Nvidia-modified version of a Chinese open-source model. That system helped defend the company after a cyberattack. He also referenced a recent letter.

That letter was signed by Nvidia CEO Jensen Huang and 24 other companies, including Hugging Face itself. The letter urged the U.S. government to support open models. It argued against restricting them. In a separate CNBC interview in late July, Delangue made similar arguments. He cited that same letter again. He also warned that China is “clearly dominating” open-source AI.

A Possible Comeback in Cloud Computing

This deal would mark something else notable for Nvidia. It represents a potential comeback in cloud computing. Nvidia reportedly scaled back its own cloud business roughly a year ago. That business was called DGX Cloud.

According to The Information, owning Hugging Face changes things. The platform already helps developers run AI models using rented computing power. This could give Nvidia a path back into that market. Importantly, it wouldn’t need to start from scratch.

There’s also a financial safety net involved here. Nvidia has promised to help cover costs for its customers. That includes tens of billions of dollars in cloud computing deals. If customers don’t use all the computing power they signed up for, Nvidia could get stuck holding it. Owning Hugging Face would solve part of that problem. Nvidia could sell that unused capacity directly to Hugging Face’s own customers.

A Massive Jump From Hugging Face’s Last Valuation

This price represents a massive jump from Hugging Face’s previous valuation. The company raised $235 million back in 2023. That funding round valued the company at $4.5 billion at the time. Salesforce Ventures led that round. Other investors included Alphabet’s GV, IBM Ventures, and Nvidia itself.

This wouldn’t be Hugging Face’s first interaction with a Nvidia offer, either. The company reportedly turned down a $500 million investment offer last year. That offer came from Nvidia and would have valued the company at $7 billion. The Financial Times previously reported this detail. At the time, Hugging Face said it didn’t want a dominant investor. The company worried such an investor could sway its decisions unfairly.

Why Hugging Face Might Say Yes Now

So why say yes now? One could argue a full buyout differs meaningfully from taking on one giant backer. That earlier scenario often means ceding significant control. It also means facing pressure to keep growing indefinitely.

Hugging Face remains a comparatively small business by revenue, too. That’s true even within the broader AI industry. According to The Information, the company was recently generating about $150 million a year in revenue. That’s up from roughly $100 million just two months earlier.

This growth has helped the company get closer to profitability. Delangue confirmed this directly last month. Still, a price near $13 billion represents a massive multiple. That’s true for a company of this size. It’s a number that would be genuinely hard to resist.

Part of a Broader Consolidation Trend

Finally, this deal would give Hugging Face something valuable. It would gain access to Nvidia’s much deeper financial resources. This comes at an important moment industry-wide. Other AI infrastructure competitors are increasingly getting absorbed into larger companies.

Stripe’s recent deal to acquire OpenRouter illustrates this trend well. OpenRouter is a startup founded in early 2023. It helps customers select different AI models for different tasks. Those choices depend on specific needs and budgets.

OpenRouter was valued at just $1.3 billion back in May, during its Series B round. Stripe reportedly paid more than $7 billion to acquire the company earlier this month.