Nvidia Corp. agreed to acquire artificial-intelligence developer platform Hugging Face for $12.93 billion, making one of its largest acquisitions as the chipmaker seeks a bigger role in the fast-growing market for open AI models.
The transaction would give Nvidia control of a platform widely used by developers to distribute, test and collaborate on AI models and related software. The deal comes as some of Nvidia’s largest customers are investing in their own processors, potentially reducing their dependence on the company’s dominant AI chips, according to Reuters.
Nvidia shares gained about 1.5% after the transaction was announced Thursday, Reuters reported.
The acquisition represents a significant expansion of Nvidia’s strategy beyond supplying the computing hardware underpinning the AI boom. Hugging Face has become an important hub for so-called open models, which developers can download and customize, offering an alternative to proprietary systems from companies including OpenAI and Anthropic.
Nvidia has already supported the open-model ecosystem through initiatives including its Nemotron family. Owning Hugging Face would put the chipmaker closer to the developers building and experimenting with a broad range of AI systems, potentially giving Nvidia greater visibility into how the technology is evolving, according to Reuters.
The deal also arrives as companies increasingly look for less expensive ways to deploy artificial intelligence. Demand for open-weight models has risen, while Chinese developers including DeepSeek and Z.ai have emerged as significant competitors capable of delivering strong performance in areas such as computer programming at lower costs, Reuters reported.
Nvidia Chief Executive Officer Jensen Huang said Hugging Face would continue operating as an open platform serving the broader AI industry. He also said developers wouldn’t be required to use Nvidia hardware to build or deploy products through the platform, according to Reuters.
Under the agreement, Nvidia will pay roughly $11.9 billion to Hugging Face investors and establish an equity-based employee retention program worth as much as $1 billion for workers who join Nvidia, Reuters reported. The companies already have a commercial relationship that allows developers to access Nvidia computing services through Hugging Face.
Related: Anthropic Strikes $35 Billion Cloud Deal as Nvidia Deepens AI Infrastructure Role
A Premium for an AI Developer Hub
We’d love to be your preferred source for news.
Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!
The price represents a sharp increase from Hugging Face’s last publicly disclosed valuation.
The New York-based startup was valued at $4.5 billion in an August 2023 financing round in which it raised $235 million. Investors in that round included Salesforce Inc., Advanced Micro Devices Inc. and Amazon.com Inc., according to Reuters.
Founded in 2016 by French entrepreneurs Clément Delangue, Julien Chaumond and Thomas Wolf, Hugging Face has expanded beyond model hosting. Its services include datasets, software libraries and cloud tools used by developers to create and deploy AI applications.
Nvidia has ample financial resources to pursue the transaction. The company held $22.44 billion of cash and cash equivalents at the end of its July quarter, more than twice the $10.61 billion it reported in January, Reuters said. Nvidia recently projected revenue growth of about 70% for fiscal 2028, reflecting continued spending on AI infrastructure.
The company’s aggressive deployment of its balance sheet has also attracted investor scrutiny. Nvidia has entered arrangements including a guarantee of as much as $105 billion connected with an OpenAI data-center lease in Ohio, raising questions among some investors about how much the chipmaker is financially supporting the ecosystem that buys its products, according to Reuters.
Hedging Against Custom Chips
Buying Hugging Face could help Nvidia diversify its position as major technology companies pursue alternatives to its processors.
Meta Platforms Inc., Microsoft Corp. and OpenAI are among the companies developing custom AI chips, part of a broader effort by large computing customers to gain more control over costs and supply. Strengthening Nvidia’s position in open-model software and distribution could therefore provide another avenue for maintaining its influence across the AI industry even if some customers shift workloads toward internally designed silicon, Reuters reported.
The transaction also places Nvidia closer to an increasingly important debate over how open the next generation of artificial intelligence should be. Open-weight and open-source approaches can give businesses and developers greater control over how models are deployed, while proprietary developers generally retain tighter control over their technology.
Source: Reuters
Add as Preferred Source