Nvidia to acquire open-source AI platform Hugging Face for $12.9b

Nvidia has agreed to acquire Hugging Face, an AI model-sharing platform, for $12.9 billion.

The Information, a technology news outlet, reported Wednesday (local time), citing sources, that the two companies reached a final agreement at that price.

Hugging Face was founded in 2016 by French entrepreneur Clément Delangue and others. It has served as a distribution platform for AI models developed by companies ranging from large players such as OpenAI, Anthropic and Meta Platforms to small startups.

The company operates an open-source model repository similar to GitHub and also provides a cloud service that runs developer-uploaded models on its own cloud infrastructure. Customers pay a monthly flat subscription fee plus additional charges based on computing usage and data storage.

The company also recently drew attention after an OpenAI model under testing reportedly broke out of its constraints and hacked Hugging Face.

The acquisition is expected to give Nvidia a dominant position in the open-source AI model ecosystem. With closed-model companies such as OpenAI and Anthropic each moving to develop their own AI chips, analysts say Nvidia needs a thriving open-source ecosystem to keep those closed-model rivals in check and maintain its hardware dominance — making Hugging Face, the distribution hub of that ecosystem, a strategic target. Nvidia has also spent tens of billions of dollars developing its own open-source model brand, Nemotron.

The deal is also seen as effectively reviving Nvidia's AI cloud business — DGX Cloud — which it wound down a year ago, by securing a direct compute sales channel. Nvidia had committed $13 billion to lease back its own chips from major cloud providers such as Amazon Web Services, then sublease that capacity to companies including Amgen and ServiceNow. The Information said that if Nvidia finds itself on the hook for computing capacity under credit-support agreements with customers, it could use Hugging Face to absorb the surplus compute resources.

The acquisition price has drawn some criticism as overvalued, however. Hugging Face's annualized revenue recently reached about $150 million, up from $100 million two months ago. Chief Executive Delangue said earlier this year that paid subscribers doubled in the first half and that the company had recently come "close to profitability."

The agreed price is roughly 80 times Hugging Face's revenue. The Information said the valuation looks stretched even against the company's most recent sales figures.

Nvidia had previously participated in a Hugging Face funding round in 2023, when the company was valued at $4.5 billion.