Nvidia is expected to acquire Hugging Face for $12.9 billion, according to a report from The Information on Wednesday evening.
Business Insider confirmed the talks are ongoing but noted no final deal has been signed. The potential transaction values the company at over $13 billion, though the arrangement could still fall apart.
TechCrunch asked both firms for comment. Neither has answered. Nvidia’s silence is unusual given its past habit of quickly correcting reports it deems incorrect.
Why Nvidia wants Hugging Face
The move secures Nvidia’s position in open-source AI. Developers are increasingly building models that rival closed systems from Anthropic and OpenAI. Control over these open tools keeps customers reliant on Nvidia hardware.
This explains Nvidia’s previous investment in its own open-source models. The company aims to prevent rivals from building independent chips. Major labs like Google, Amazon, and OpenAI are already reducing their dependence on Nvidia by creating their own silicon.
Open-source alternatives force these labs to stay connected to Nvidia’s infrastructure.
Political alignment
Hugging Face CEO Clem Delangue has supported Nvidia’s stance on open models for months. Washington officials have considered restrictions on open-weight models. Concerns grew after Chinese labs like Moonshot AI released systems such as Kimi K3. These models matched US benchmarks at a fraction of the cost.
White House advisor David Sacks argued that fears of competition were exaggerated by the dominance of Anthropic and OpenAI.
Delangue told CBS’s “Face the Nation” earlier this month that Hugging Face used an Nvidia-modified Chinese model to recover from a cyberattack. He also signed a letter with Nvidia CEO Jensen Huang and 24 other companies. The letter urged the US government to protect open models rather than restrict them.
In a CNBC interview in late July, Delangue repeated these points. He warned that China is clearly dominating the open-source sector.
Return to cloud computing
The acquisition helps Nvidia re-enter the cloud market. The company scaled back its DGX Cloud division about a year ago. Owning Hugging Face allows Nvidia to offer rented computing power without starting from scratch.
Hugging Face already enables developers to run models using rented capacity.
Financial safety net
Nvidia has committed to covering costs for tens of billions of dollars in cloud deals for its clients. If customers do not use their full capacity, Nvidia absorbs the expense. Access to Hugging Face’s user base allows Nvidia to sell that unused power.
Valuation jump
The price represents a major increase from Hugging Face’s last known valuation. The company raised $235 million in 2023, valuing it at $4.5 billion. Salesforce Ventures led that round. Investors included Alphabet’s GV, IBM Ventures, and Nvidia.
Hugging Face previously rejected a $500 million investment offer from Nvidia late last year. That deal would have valued the firm at $7 billion. The company stated it did not want a dominant investor that could influence its decisions.
A buyout differs from accepting a large backer. The latter often means losing control while facing pressure to grow continuously.
Revenue remains relatively low for an AI infrastructure firm. The Information reported annual earnings of roughly $150 million. This figure rose from about $100 million two months earlier.
Delangue told TechCrunch last month that the company is close to profitability. A price near $13 billion would be a massive multiple for a business of this size.
The deal provides access to Nvidia’s deeper capital reserves. Competitors are being acquired by larger outfits. Stripe recently paid more than $7 billion for OpenRouter. OpenRouter was valued at $1.3 billion during its Series B round in May. The startup helps customers select AI models based on their needs and budget.
What it means
Developers lose an independent hub for open models. They must now rely on Nvidia’s ecosystem for hosting and distribution. This centralises control over the tools used to build and run AI.
