NVIDIA Agrees to Acquire Open-Source AI Platform Hugging Face for $12.9 Billion

According to The Information on Wednesday (26th), citing sources familiar with the matter, NVIDIA (NVDA-US) has agreed to acquire Hugging Face, an open-source artificial intelligence (AI) model platform, for $12.9 billion. If accurate, this would rank among NVIDIA's largest acquisitions to date, underscoring the company's continued confidence in the expanding demand for AI technologies, led by CEO Jensen Huang.

Earlier on Wednesday, Business Insider reported that the two companies had been in acquisition talks, with Hugging Face's valuation potentially exceeding $13 billion.

Hugging Face provides open-source large language models and datasets—freely usable and modifiable open AI models—contrasting with closed AI systems that emphasize control and proprietary ownership. Meanwhile, closed-model developers such as Anthropic and OpenAI are actively pursuing in-house AI chip development to reduce reliance on NVIDIA's GPUs.

The reported $12.9 billion acquisition price stands in stark contrast to Hugging Face's annual revenue of approximately $150 million. According to The Information's earlier report this week, Hugging Face's annualized revenue is around $150 million.

In 2023, NVIDIA participated in a $235 million funding round for Hugging Face alongside Salesforce (CRM-US) and Google, a subsidiary of Alphabet (GOOGL-US), valuing the company at $4.5 billion at the time. Since then, NVIDIA has invested billions into the broader AI ecosystem, including stakes in AI developers like OpenAI.

The UK's Financial Times (FT) reported in January that Hugging Face had rejected a $500 million investment offer from NVIDIA last year, which would have valued the company at $7 billion.

NVIDIA's strategic bet on strong AI demand was further confirmed on Wednesday with its financial outlook: the company projected 70% revenue growth for the upcoming fiscal year and announced $18 billion in committed equity investments through fiscal 2027.

During Wednesday's earnings call, NVIDIA CEO Jensen Huang stated, "Globally, both closed models and open models are needed, and usage of both is rapidly surging."

He added, "Almost all open models are running on NVIDIA's platform."

As developers seek more cost-effective AI development methods, open-source AI is gaining momentum. Companies release model weights and other components, enabling other developers to build easily upon their work.

Hugging Face positions itself as a platform for AI developers, offering tools and collaboration environments to build AI applications. Users can browse and download content for free, while the Pro subscription service offers enhanced access to explore the full spectrum of AI—including text, image, video, audio, and 3D—with higher computing capacity, including up to 40 minutes of RTX Pro 6000 Blackwell computing power, a NVIDIA hardware product.

This acquisition news comes roughly a month after Hugging Face suffered a security incident in which its infrastructure was breached following a hacker attack triggered by a runaway model from OpenAI.