Nvidia Corp. (NASDAQ:NVDA) has confirmed its $12.93 billion acquisition of Hugging Face, betting that ownership of the world’s leading open-model hub can extend its influence beyond chips and deeper into how AI is built.
CEO Jensen Huang said Hugging Face had attracted other potential buyers but argued Nvidia was its natural home. "This is such a large growth driver of our company, and together we can scale the open community even faster than they’re able to do today," he told CNBC Thursday.
Hugging Face CEO Clément Delangue said his company approached Huang after deciding that open-source AI needed greater resources, scale and visibility. "We told him we want to make open-source AI big, and he told us, ‘Let’s do it,’" Delangue said.
Delangue also cited the summer breach by OpenAI agents as evidence of why open models matter. He said Hugging Face could not defend itself using proprietary, closed-source APIs and instead had to rely on open models.
Nvidia will pay about $11.9 billion to shareholders and offer up to $1 billion in equity-based retention awards. The transaction is expected to close during the first half of 2027, subject to regulatory approval.
Huang Backs Both Sides of AI Race
Huang said Nvidia is not choosing between open and closed AI. The company uses services including Claude Code, Codex, Perplexity and Cursor, and he said businesses should rent ready-made AI tools whenever they meet their needs.
Hugging Face has more than 18 million users, while its platform hosts three million models, 500,000 datasets and one million AI applications, Delangue said.
Delangue wants to expand that community to 100 million AI builders. He said Hugging Face would continue operating as an independent, neutral platform within Nvidia.
Can Hugging Face Remain Neutral?
The valuation is difficult to justify using conventional metrics. Hugging Face reportedly generates about $150 million in annualized revenue, meaning Nvidia is paying roughly 86 times sales. The startup was valued at $4.5 billion in 2023.
Tekonyx founder Sid Nag said Nvidia’s resources could accelerate open-model adoption but warned Hugging Face could gradually become an "Nvidia-centered distribution channel."
Linthicum Research founder David Linthicum questioned whether the companies’ cultures, customers and business models fit together, predicting the promised "1+1=3" combination could deliver something closer to "1+1=1.2."
Nvidia previously abandoned its proposed Arm acquisition after regulators argued that owning neutral technology used by competitors could give it access to sensitive information and weaken rival innovation.
Why It Matters
The deal pushes Nvidia beyond chips and deeper into the software ecosystem that shapes AI adoption, just as major customers including OpenAI, Microsoft and Meta develop their own processors.
Hugging Face could strengthen Nvidia’s grip on AI developers and models. That broader moat helps explain why Polymarket traders give Nvidia a roughly 78% chance of ending 2026 as the world’s most valuable company.
The acquisition therefore strengthens Nvidia on two fronts: it protects demand for its chips while giving it more influence over the software ecosystem built on top of them.
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