Nvidia is close to buying Hugging Face, the popular hub where developers share and download open-source AI models. The price is close to $13 billion.
The Information broke the story late Wednesday night, citing a source close to the deal. But nothing is signed yet.
Business Insider reports talks are still ongoing and could fall apart before a final agreement gets made.
Both companies have stayed quiet so far. Nvidia’s silence is especially noteworthy because it usually moves fast to correct stories it thinks are wrong.
Hugging Face
Founded back in 2016, Hugging Face became the go-to spot for developers building and sharing open-source AI models.
Nvidia wants in because it’s getting some serious competition from companies like OpenAI, Google, Amazon, and Anthropic. They are all building their own AI chips now.
That means they need Nvidia less. For a company built on chip sales, that’s a major threat.
Nvidia’s strategy is to attain a strong open-source AI scene that gives customers more choices outside of those big closed labs.
And more open-source activity means more demand for the kind of computing power Nvidia sells.
Nvidia has already spent tens of billions of dollars building its own open-source AI models. Buying Hugging Face would take that bet even further.
Alliance
Hugging Face CEO Clem Delangue has spent much of this year cheering on Nvidia’s open-source efforts. That alignment showed up again and again in public interviews.
Earlier this month, Delangue appeared on CBS’s Face the Nation.
He explained that Hugging Face used a Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack.
He also pointed to a letter, signed by Nvidia CEO Jensen Huang and two dozen other companies, urging the U.S. government to support open models instead of restricting them.
He made similar comments in a CNBC interview back in July. At that time, he warned that China is clearly pulling ahead in open-source AI.
Washington officials have reportedly discussed limiting open-weight AI models.
Chinese labs, including Moonshot AI with its Kimi K3 model, have released systems that match top U.S. models on tests, all while costing far less to run.
That’s left Washington with concerns about competition and national security. Not everyone agrees restrictions are the answer, though.
White House advisor David Sacks has argued that fears about Chinese open-source AI are being pushed harder by what he calls a duopoly, referring to Anthropic and OpenAI.
Cloud Computing
Nvidia pulled back its own cloud service, DGX Cloud, about a year ago. That business never quite took off the way the company wanted.
Hugging Face already helps developers rent computing power to run their AI models. If Nvidia buys the company, it could get back into cloud computing without starting over from scratch.
That matters more than it might seem. Nvidia has promised to help cover huge cloud computing deals for its customers, deals worth tens of billions of dollars.
If those customers don’t use all the power they signed up for, Nvidia could be left holding the bag.
Owning Hugging Face would give Nvidia a way to sell off that extra capacity instead of eating the cost.
Offers
This wouldn’t be the first time Nvidia tried to get closer to Hugging Face. Late last year, Nvidia offered $500 million for a stake in the company.
That deal would have valued Hugging Face at $7 billion, but Hugging Face turned it down. The company said it didn’t want one investor with that much influence over its decisions.
Fast forward to now, and the number on the table has nearly doubled. So why say yes this time?
A full buyout works differently than taking on one big investor. With an acquisition, there’s no in-between.
Hugging Face wouldn’t be stuck answering to a powerful backer while also trying to keep growing on its own terms.
Hugging Face is still a fairly small business when you look at its revenue.
The company was recently pulling in about $150 million a year. That’s up from roughly $100 million just two months before that, a fast jump in a short window.
Delangue told TechCrunch last month that the company is getting close to profitability. Even so, a price near $13 billion is a huge multiple for a company this size.
For comparison, Hugging Face raised $235 million back in 2023 at a $4.5 billion valuation. That round included Salesforce Ventures, Alphabet’s GV, IBM Ventures, and Nvidia itself.
AI Infrastructure
Stripe recently agreed to buy OpenRouter, a startup that helps customers pick the right AI model for different tasks and budgets.
OpenRouter was valued at just $1.3 billion back in May and Stripe reportedly paid more than $7 billion for it earlier this month.
That’s a massive jump in just a few months. It shows how fast this AI infrastructure is moving, and how much money is chasing it.
