Nvidia to Acquire Hugging Face for $12.9 Billion, Sources Say

Valued at $12.9 billion, Hugging Face is set to be acquired by Nvidia, The Information reported Wednesday night, citing a source familiar with the matter. Business Insider confirmed the same day that negotiations—reportedly valuing the company above $13 billion—have not yielded a finalized agreement and could still fall apart.

Market positioning and strategic rationale

Hugging Face, founded in 2016, operates one of the most widely used platforms for developers to share and download open-source AI models. A purchase would position Nvidia at the center of the open-source AI ecosystem just as developers intensify efforts to close the performance gap with proprietary systems from Anthropic and OpenAI.

The move appears aimed at reinforcing Nvidia’s dominance in AI hardware. Major closed-model labs—including OpenAI, Google, Amazon, and Anthropic—are developing their own AI chips to reduce dependence on Nvidia. A robust open-source model ecosystem offers users alternatives to those labs, sustaining demand for Nvidia’s chips. That logic underpins Nvidia’s prior investment of tens of billions of dollars into building its own open-source AI models.

Regulatory context and public alignment

Hugging Face CEO Clem Delangue has publicly aligned with Nvidia’s open-source advocacy throughout 2026, amid growing U.S. government scrutiny of open-weight AI models. Reports indicate Washington officials weighed potential restrictions following releases like Moonshot AI’s Kimi K3—a Chinese open-source system matching top U.S. models on benchmarks while requiring significantly less computational cost.

In a July appearance on CBS’s “Face the Nation,” Delangue cited Nvidia’s modified version of a Chinese open-source model as instrumental in Hugging Face’s cyberattack response. He also referenced a joint letter signed by Nvidia CEO Jensen Huang and 24 other companies—including Hugging Face—that urged U.S. policymakers to support, rather than restrict, open AI models. In a late-July CNBC interview, Delangue repeated that point and stated China is “clearly dominating” open-source AI.

Cloud infrastructure and capacity utilization

The acquisition would represent a strategic reentry for Nvidia into cloud computing. The company reportedly scaled back its DGX Cloud service about a year ago. According to The Information, acquiring Hugging Face—which already enables developers to run AI models using rented compute resources—could allow Nvidia to reestablish a cloud presence without rebuilding from scratch.

A financial incentive also exists: Nvidia has committed to covering tens of billions of dollars in cloud computing contracts for customers. If those customers underutilize reserved capacity, Nvidia absorbs the cost. Owning Hugging Face would let Nvidia monetize that excess capacity by selling it to Hugging Face’s user base.

Valuation trajectory and prior overtures

The $12.9 billion price tag marks a sharp increase from Hugging Face’s last known valuation. In 2023, the company raised $235 million in a round that valued it at $4.5 billion. That round was led by Salesforce Ventures, with participation from Alphabet’s GV, IBM Ventures, and Nvidia.

This is not Nvidia’s first attempt to deepen ties with Hugging Face. Late last year, the company offered a $500 million investment that would have valued Hugging Face at $7 billion. Hugging Face declined, stating it did not want a dominant investor capable of influencing its decision-making.

Revenue growth and competitive landscape

Hugging Face remains comparatively small by revenue among AI firms. The Information reported its annual revenue recently reached approximately $150 million—up from roughly $100 million two months earlier. Delangue told TechCrunch last month the company is “close to profitability.”

Yet a near-$13 billion valuation represents an exceptionally high multiple for a firm of this scale. The deal also comes as competitors in AI infrastructure consolidate: Stripe acquired OpenRouter—founded in early 2023 to help users select AI models based on task and budget—for more than $7 billion earlier this month. OpenRouter had been valued at $1.3 billion during its Series B round in May.