Nvidia Corp. (NASDAQ:NVDA) is nearing what could become a roughly $14 billion acquisition of AI platform Hugging Face, extending CEO Jensen Huang’s push beyond chips and deeper into the software ecosystem built on top of them.
Bloomberg reported Wednesday that Nvidia is in advanced talks to acquire Hugging Face for $12.9 billion, with another roughly $1 billion potentially going toward employee retention. An agreement could come as soon as this week, although no final deal has been reached.
Nvidia Expands Beyond Chips
Franklin Templeton portfolio manager Sara Araghi told Bloomberg that Nvidia is "backstopping" AI companies that need financing, with Bloomberg characterizing her view of its recent moves as "ecosystem building rather than circular finance."
Hugging Face could make that strategy more useful. The Information reported that its compute-rental business could give Nvidia another route into cloud services and potentially help place computing capacity Nvidia has agreed to financially backstop for customers.
Why Nvidia Wants Open Models to Win
Bloomberg reported that Jensen Huang has been encouraging open models partly to prevent AI from being dominated by a handful of large companies that are both major Nvidia customers and developing their own chips.
Prediction traders remain confident in Nvidia itself. Polymarket gives the chipmaker a 76% chance of ending 2026 as the world’s largest company, on more than $6.5 million in volume.
Chinese developers have meanwhile become major players in open-weight AI. Kalshi traders give a Chinese model a 9.2% chance of reaching No. 1 this year, which would be a major upset for the American frontier companies.
Hugging Face Once Chose Independence
Nvidia was already a minority investor in Hugging Face after participating in its $235 million Series D in 2023. But the startup later rejected a reported $500 million Nvidia investment at a $7 billion valuation amid concerns about giving one investor too much influence.
CEO Clément Delangue warned in 2024 that "concentration of power is the biggest risk in AI." The comment predates the takeover talks, but Nvidia could now control one of the key platforms where developers share and deploy open models.
Hugging Face reportedly generates around $150 million in annualized revenue, meaning Nvidia would be paying roughly 86 times sales at the proposed $12.9 billion purchase price. That suggests much of the value lies in Hugging Face’s developer community and position at the center of the open-model ecosystem, rather than its current revenue.
That position could become harder to preserve under Nvidia ownership. Analyst Brad Gastwirth said "the biggest risk is neutrality," warning that Nvidia would need to avoid undermining Hugging Face’s reputation as an open platform.
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