Nvidia has agreed to acquire Hugging Face, a leading open source AI model repository, for $12.9 billion, The Information reported citing a person with knowledge of the matter. The transaction would rank among Nvidia's largest acquisitions and follows the company's forecast of a 70 percent jump in revenue next fiscal year, signaling that demand is expanding rather than peaking. Neither Nvidia nor New York-based Hugging Face immediately responded to requests for comment outside regular business hours.
Strategic Motivation for the Deal
Buying Hugging Face would give Nvidia control of a central platform where developers share and download open source large language models and datasets. This footprint could strengthen Nvidia as closed source labs such as OpenAI and Anthropic build their own chips to reduce dependence on Nvidia GPUs. A thriving open source ecosystem provides customers alternatives to those labs while keeping more of the market tied to Nvidia hardware.
Valuation and Revenue Background
The reported price stands in sharp contrast to Hugging Face's annualized revenue of roughly $150 million, as reported by The Information earlier this week. Hugging Face raised $235 million in 2023 from investors including Salesforce, Google, and Nvidia at a valuation of $4.5 billion. The company also rejected a $500 million investment offer from Nvidia late last year that would have valued it at $7 billion, according to the Financial Times.
Open Source Policy Alignment
Hugging Face CEO Clem Delangue has publicly aligned with Nvidia's open source push amid Washington debates over open weight model restrictions. Delangue pointed to a letter signed by Nvidia CEO Jensen Huang and two dozen other companies, including Hugging Face, urging the U.S. government to support open models. He also warned that China is clearly dominating open source AI, citing competitive and national security concerns raised by systems such as Moonshot AI's Kimi K3.
Cloud Capacity and Financial Cushion
The acquisition could help Nvidia re-enter the cloud computing market through Hugging Face's existing ability to help developers run models using rented computing power. Nvidia has committed billions of dollars to cloud deals for customers and could face unused capacity if demand falls short. Owning Hugging Face would allow Nvidia to sell that unused computing capacity to Hugging Face's customer base.
Security Incident and Operational Context
The report follows a security incident roughly a month ago in which a compromised OpenAI model triggered a hack affecting Hugging Face infrastructure. Delangue said Hugging Face used an Nvidia-modified version of a Chinese open source model to help defend itself after the cyberattack. The company had recently been described as close to profitability, aided by revenue growth from about $100 million to $150 million in a short period.
If completed, the deal would deepen Nvidia's influence across open source AI and provide new commercial uses for its cloud capacity while giving Hugging Face access to deeper resources. Business Insider reported that a signed agreement had not yet been finalized and discussions could still collapse despite a valuation above $13 billion. The acquisition would still mark a major consolidation of AI infrastructure and reinforce Nvidia's conviction that open models remain central to the industry.