Nvidia agrees to buy Hugging Face for $12.9 billion

Nvidia ↘ 1.51% has agreed to acquire Hugging Face, the open-source AI model platform, for $12.9 billion, according to a report by The Information on Wednesday. Separately, Business Insider reported that the two companies have held acquisition talks in recent weeks at a valuation exceeding $13 billion, though a deal has not been finalized and could still fall apart.theinformation+2

The reports, which emerged hours after Nvidia posted consensus-beating quarterly earnings and forecast a 70% jump in revenue for the next fiscal year, mark what would be one of the chipmaker's largest acquisitions to date.economictimes.indiatimes+1

A Deal in the Making

Nvidia and Hugging Face have a history that predates these talks. Nvidia participated in Hugging Face's $235 million funding round in 2023 alongside Salesforce ↗ 0.22% and Alphabet's ↘ 1.01% Google, which valued the startup at $4.5 billion. The Financial Times reported in January that Hugging Face rejected a $500 million investment offer from Nvidia last year that would have valued the company at $7 billion, with the startup saying at the time it did not want a dominant investor that could sway decisions.businessinsider+2

Microsoft ↘ 1.24% also met with Hugging Face, but those talks are not ongoing, according to Business Insider.businessinsider

Nvidia's Acquisition Spree

The potential deal fits into a broader pattern of dealmaking by Nvidia, which has deployed its cash reserves aggressively across the AI sector. The company said Wednesday it has $18 billion committed to equity investments for the remainder of its fiscal year, on top of $47.9 billion it already holds in private companies. Over the past year, Nvidia has acquired foundation model startup Kumo, as well as ShedMD, Illumex, and Groq. It also recently signed a $6 billion licensing agreement with AI startup Poolside.investing+2

What's at Stake

Hugging Face sits at the center of the open-source AI ecosystem, hosting millions of models and datasets that developers worldwide rely on. Owning the platform could give Nvidia a larger foothold with those developers and potentially drive more workloads onto its chips.businessinsider

But as Business Insider noted, Nvidia ownership could complicate one of Hugging Face's core strengths: its neutrality. The platform currently supports models and hardware from across the industry, including Nvidia competitors such as AMD Advanced Micro Devices, Inc. ↘ 2.36% and Intel ↘ 0.60%. Neither Nvidia nor Hugging Face responded to requests for comment.bloomberg+1