Nvidia has agreed to buy an AI startup for $12.9 billion, according to media reports. Why is it doing this?
Nvidia is prepared to pay for Hugging Face a sum that is tens of times greater than its revenue
Chipmaker Nvidia is close to acquiring Hugging Face. Photo: Robert Way / Shutterstock
Chipmaker Nvidia is close to acquiring Hugging Face, a popular open-source repository of AI models. According to The Information, a deal has already been reached—it is valued at $12.9 billion.
Details
In recent weeks, the parties have been engaged in active negotiations, according to Business Insider, citing a source familiar with the situation. The Information, citing another anonymous source, reports that the companies have already reached an agreement on the deal. The deal is valued at $12.9 billion. This figure stands in stark contrast to Hugging Face’s annual revenue, which, according to The Information, totals just $150 million, Reuters reports.
Representatives from Nvidia and Hugging Face did not respond to requests for comment from Reuters.
Why Is This Important for Nvidia?
A deal of this magnitude could be one of Nvidia’s largest acquisitions. It also underscores the confidence of the market’s most valuable company that demand for AI technology continues to grow, Reuters notes. In this case, Nvidia will gain access to a platform with open-source language models and datasets, which could be an important strategic move for the chipmaker, the agency notes. Competitive pressure on Nvidia’s semiconductor business is mounting, as developers of proprietary AI systems, such as Anthropic or OpenAI, are seeking to create their own chips.
MarketWatch adds that Nvidia is also placing a strong emphasis on open-source neural networks with open weights. Interest in them is growing rapidly due to their cost-effectiveness.
“The world will need both closed and open AI models,” said Nvidia CEO Jensen Huang during a conference call discussing the company’s financial results on August 26. “The use of both types [of AI models] is growing rapidly,” he noted, adding that “almost all open-source neural networks run on Nvidia chips.”
In 2023, Nvidia, along with other companies, participated in a $235 million funding round for Hugging Face. As a result, the startup’s total valuation at that time reached $4.5 billion, Reuters reports. However, as reported by the Financial Times, in 2025, Hugging Face rejected a $500 million investment offer from Nvidia, which would have brought the company’s valuation to $7 billion. Hugging Face attributed its decision at the time to concerns about losing its status as a neutral platform due to overly close ties with a single hardware manufacturer.
What is Hugging Face known for?
Founded in 2016, the startup positions itself as a platform for AI developers. Hugging Face provides access to the tools needed to create custom AI applications and collaborate with other market participants. The platform hosts AI models, datasets, and open-source applications, according to MarketWatch.
In addition to the free basic features, the company offers a Pro subscription. It allows you to work with text, images, video, audio, and 3D content, and provides access to significant computing power—up to 40 minutes of usage on Nvidia RTX Pro 6000 Blackwell architecture hardware.
In July, Hugging Face found itself at the center of an AI safety incident. AI agents being tested by OpenAI got out of control and unintentionally compromised the platform’s infrastructure. This sparked a debate within the industry about the risks of autonomous AI models. Later, on August 26, OpenAI acknowledged that it could have responded more quickly to prevent the attack, according to Bloomberg.
This article was AI-translated and verified by a human editor
