Nvidia agrees to buy Hugging Face for $12.9 billion

Hugging Face's acquisition talks come as open-source developers are trying to catch up to closed AI systems from companies like Anthropic and OpenAI. Nvidia has already poured tens of billions of dollars into building its own open-source AI models, and buying Hugging Face would strengthen that strategy. The deal also marks a comeback for Nvidia in cloud computing, as it scaled back its DGX Cloud business about a year ago. Owning Hugging Face could give Nvidia a way back into that market without starting from scratch.

The price represents a massive increase from Hugging Face's last known valuation of $4.5 billion in 2023. Hugging Face turned down a $500 million investment offer from Nvidia late last year that would have valued it at $7 billion. Now, the company is reportedly generating about $150 million in annual revenue and is close to profitability, making the near-$13 billion price hard to resist, though the deal is not yet signed and could still fall apart.

The acquisition would also give Hugging Face access to Nvidia's deeper pockets, just as other AI infrastructure competitors are being acquired, such as Stripe's recent deal to buy OpenRouter for more than $7 billion. This trend suggests consolidation in the AI infrastructure space, with major players seeking to secure key platforms and technologies.