Nvidia is reportedly planning a $13 billion deal for Hugging Face. Nvidia Corp. has reportedly agreed to spend about $13 billion to acquire Hugging Face, a major platform for open-weight artificial intelligence models. The news came on the same day Nvidia reported that its quarterly revenue had doubled, sending its shares up about 7%.
Hugging Face is a major name in open AI. The company hosts one of the world’s largest collections of open-weight AI models. These models can be downloaded, changed and adapted by developers for different uses. The company has pushed for a more open AI industry. Hugging Face has long supported the idea that AI development should not be controlled by a small number of powerful companies.
OpenAI security incident
The company recently had a controversial connection with OpenAI. OpenAI’s AI agents reportedly breached Hugging Face during a security-testing exercise. Hugging Face handled the incident diplomatically, reflecting its position at the centre of the wider open-source AI community, according to Bloomberg.
Hugging Face rejected Nvidia before
Hugging Face had previously rejected a big Nvidia investment. Last year, the startup reportedly turned down a $500 million investment from Nvidia that would have valued the company at about $7 billion. The reason was concern over too much control by one investor. Hugging Face reportedly did not want a single dominant investor to have too much influence over its decisions.
In 2024, Co-Chief Executive Officer Clem Delangue said: “Concentration of power is the biggest risk in AI!” according to Bloomberg. The possible acquisition creates a major contradiction. Hugging Face was built around making AI more open and less controlled by a few companies. Nvidia, meanwhile, is the world’s dominant AI-chip maker and would gain much greater influence over the open AI ecosystem if it bought the company.
Why Nvidia wants open AI
Nvidia has a strong reason to support open AI models. Developers using open models can choose which chips they want to run those models on. Nvidia could benefit because it can continue selling its processors to those developers instead of allowing them to shift toward rival chips. This is especially important as Nvidia faces competition from major AI companies.
OpenAI and Alphabet’s Google are both developing their own AI chips, creating a threat to Nvidia’s dominance in the semiconductor market. Nvidia and OpenAI have a complicated relationship. Nvidia is one of OpenAI’s biggest investors, while OpenAI is also a major customer and player in the AI infrastructure market.
$13 billion price tag
The deal is extremely expensive compared with Hugging Face’s current revenue. Hugging Face recently generated about $150 million in annual revenue, according to Bloomberg. That means Nvidia could be paying about 86 times annualised revenue.
Nvidia can afford to make such a large strategic bet. The main value for Nvidia is therefore not Hugging Face’s current revenue. The bigger prize is the company’s position inside the developer community. Hugging Face connects Nvidia to millions of developers and coders who download, test and deploy AI models.
The deal could also help Nvidia’s cloud ambitions. More AI developers using Nvidia hardware could create another opportunity for the company to rent computing power and cloud infrastructure to AI companies.
The possible sale is also being viewed as a win for European technology. But there is another side to that argument. The acquisition could also be seen as another example of a successful European startup being bought by a much larger Silicon Valley company instead of growing into a major independent technology giant.
Also read: How did bitcoin turn Strategy’s $9.5b loss into a $4.7b profit?
Open-source AI concerns
It could also be a setback for the open-source AI movement. Hugging Face became famous for supporting decentralised AI, but its sale to Nvidia could put that reputation under pressure. Nvidia already has enormous control over the AI-chip market. The company is estimated to control around 70% to 90% of AI chip sales, according to Bloomberg.
Google has developed its own AI processors, but Nvidia remains the dominant supplier of chips used to power AI systems. Hugging Face’s neutrality could now come under scrutiny. If Nvidia owns the platform, developers may question whether Hugging Face will remain completely neutral when it comes to choosing hardware for AI models.
More power for Nvidia
The biggest concern is influence over developers. Nvidia could potentially use Hugging Face’s huge developer network as another route to promote its own chips and AI infrastructure. The deal highlights a larger problem in the AI industry. Even though there are now many companies building chatbots and AI models, much of the infrastructure needed to run those systems remains concentrated in the hands of a small number of companies.
In simple terms, Nvidia may not be buying Hugging Face just for its $150 million revenue. It is potentially buying developer access, influence over open AI models and a stronger position in the future battle over AI chips and computing power.
The reported $13 billion deal could therefore reshape the AI landscape. If completed, Nvidia would gain control of one of the most important platforms in open AI at a time when competition over models, chips, developers and computing infrastructure is intensifying.
The central question will be whether Hugging Face can remain open while being owned by Nvidia. The acquisition could help open models grow, but it could also give Nvidia even more power over an industry that Hugging Face originally wanted to make less centralised.