Nvidia Could Acquire Hugging Face for $13 Billion
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Nvidia has agreed to acquire Hugging Face for $12.9 billion, The Information reported Wednesday evening, citing a source familiar with the matter. According to TechCrunch, however, no signed agreement has been reached yet. Neither company has commented on the reports. Nvidia’s silence is particularly notable, TechCrunch notes, given that the chip giant has historically been quick to respond to reports it considers inaccurate.
Nvidia Wants to Protect Its Chip Dominance
Hugging Face, founded in 2016, is one of the most popular hubs where developers share and download open-source AI models. The acquisition would give Nvidia a strong position in the world of open-source AI, at precisely the moment when open-source developers are doing their best to catch up with closed AI systems from companies like Anthropic and OpenAI.
Nvidia may be looking to use the acquisition to protect its dominance in AI chips, which from the outside appears increasingly at risk. Virtually all of the largest closed AI labs — OpenAI, Google, Amazon, and Anthropic — are now building their own AI chips to reduce their dependence on Nvidia. A thriving ecosystem of open-source AI models gives customers more alternatives to these closed labs, which in turn keeps more of the market dependent on Nvidia’s hardware.
A Potential Comeback in Cloud Computing
The deal would also mark a kind of comeback for Nvidia in cloud computing. The chip giant scaled back its own cloud business, DGX Cloud, about a year ago. But according to The Information, owning Hugging Face could offer a path back into that market without starting from scratch. There is also a financial safety net.
Nvidia has committed to sharing the costs of tens of billions of dollars in cloud computing deals for its customers. If those customers don’t use all the computing capacity they signed up for, the company could be left holding the bag. Owning Hugging Face would give Nvidia the ability to sell that unused capacity to Hugging Face customers.
Hugging Face’s Valuation Would Surge Massively
The price represents an enormous jump from Hugging Face’s last known valuation. The company raised $235 million in a 2023 funding round that valued it at $4.5 billion. That round was led by Salesforce Ventures, with participation from Alphabet’s GV, IBM Ventures, and Nvidia itself.
This would also not be Hugging Face’s first encounter with a Nvidia offer. The company turned down a $500 million investment offer from Nvidia late last year that would have valued it at $7 billion. Hugging Face said at the time that it did not want a dominant investor who could influence its decisions.
The company is also still a comparatively small business by revenue in the world of AI. The US company reportedly generated around $150 million in annual revenue most recently, up from roughly $100 million just two months prior. That growth is said to have brought Hugging Face close to profitability. Nevertheless, a price near $13 billion would be a massive multiple for a company of this size — and hard to turn down.
