Nvidia nears $12.9 billion acquisition of hugging face amid open-source AI competition

Nvidia has agreed to acquire Hugging Face for $12.9 billion, according to The Information, which cited a source familiar with the matter. The deal, which would value Hugging Face at over $13 billion, is still pending a signed agreement and could still fall through. TechCrunch reached out to both Nvidia and Hugging Face for comment, but neither has responded. Nvidia’s silence is notable given its past rapid response to inaccurate reports. Hugging Face, founded in 2016, is a leading hub for open-source AI models, and its acquisition would strengthen Nvidia’s position in the open-source AI space. This move comes as open-source developers are gaining ground against closed-source AI systems from companies like Anthropic and OpenAI. Nvidia’s interest is partly driven by its desire to protect its dominance in AI chips, which are increasingly under threat as major closed-source labs like OpenAI, Google, Amazon, and Anthropic develop their own AI chips. A robust open-source ecosystem keeps more customers reliant on Nvidia’s hardware, which is why the company has invested tens of billions in its own open-source models. Hugging Face CEO Clem Delangue has publicly aligned with Nvidia’s open-source push, particularly amid discussions in Washington about potential restrictions on open-weight models. Delangue highlighted the threat posed by Chinese labs like Moonshot AI, which have developed models such as Kimi K3 that outperform U.S. models at lower costs. Delangue also referenced a letter signed by Nvidia CEO Jensen Huang and 24 other companies, including Hugging Face, urging the U.S. government to support open models rather than restrict them. In a CNBC interview, Delangue warned that China is clearly dominating open-source AI. The acquisition would also mark a potential comeback for Nvidia in cloud computing. Nvidia reportedly scaled back its DGX Cloud business, but acquiring Hugging Face, which already helps developers run AI models using rented computing power, could provide a pathway back into the market. Additionally, owning Hugging Face would allow Nvidia to sell unused cloud computing capacity to its customers, providing a financial safety net. The $12.9 billion price tag represents a significant jump from Hugging Face’s last known valuation of $4.5 billion following a $235 million funding round in 2023. This wouldn’t be Hugging Face’s first encounter with an Nvidia offer; the company had previously rejected a $500 million investment from Nvidia in late 2023, which would have valued it at $7 billion. Hugging Face had cited concerns about losing control to a dominant investor. Hugging Face, which recently reported annual revenue of about $150 million, is still a relatively small business in the AI industry. The company has grown close to profitability, according to Delangue. A $13 billion valuation would be a massive multiple for a company of this size, making the deal highly attractive. The acquisition also positions Hugging Face to benefit from Nvidia’s resources as other AI infrastructure competitors, such as Stripe’s recent $7 billion acquisition of OpenRouter, are being consolidated into larger entities.