What happened
Nvidia announced on September 3 that it has agreed to acquire Hugging Face, a widely used platform for sharing AI models, for about $12.9 billion. The deal is expected to close in the first half of 2027, and Hugging Face will remain an open platform.
Why it matters
This is nearly twice the cost of Nvidia's largest prior acquisition, Mellanox, bought for $6.9 billion in 2019. That deal became highly successful, with the networking line generating $31.4 billion in fiscal 2026, more than four times the purchase price. Nvidia likely expects Hugging Face to drive chip and system sales, not just its own revenue.
What to watch
The outcome hinges on whether owning the model-sharing platform keeps developers and their compute budgets on Nvidia's hardware. Watch whether the deal closes in the first half of 2027, as expected.
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Nvidia's announcement to acquire Hugging Face for $12.9 billion marks a significant move in the AI sector, but it is not without precedent. The company's previous largest acquisition, Mellanox, bought for $6.9 billion in 2019, proved to be a strategic win. Mellanox's networking technology became integral to Nvidia's AI data center systems, with revenue from that line reaching $31.4 billion in fiscal 2026. The success came indirectly: it boosted Nvidia's own product sales rather than Mellanox's standalone growth.
Hugging Face, founded in 2016, is a major hub for AI model sharing, with over 18 million developers using the platform. The acquisition price is steep, at around 86 times reported annualized revenue of over $150 million. However, Nvidia may see the value in owning the platform where developers choose models, potentially keeping them within Nvidia's ecosystem.
The deal is large but not outsized for today's Nvidia, which generated $96.2 billion in revenue in a single fiscal quarter. The risk is that the payoff, if any, will likely be indirect, tied to chip and system sales rather than Hugging Face's own revenue. The test will be whether Nvidia can integrate Hugging Face into its broader strategy as successfully as it did with Mellanox.
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