Nvidia Agreed to Buy Hugging Face for $12.9 Billion

IBL News | New York

Nvidia has agreed to buy Hugging Face for $12.9 billion, The Information reported. The companies avoided commenting on the transaction.

Hugging Face, founded in 2016, is one of the most popular hubs where developers share and download open-source AI models.

Buying it will give Nvidia a strong presence in the open-source AI space, helping to protect its dominance in AI chips, especially since the biggest closed-source companies (OpenAI, Google, Amazon, and Anthropic) are now building their own AI chips to reduce their reliance on Nvidia.

Also, owning Hugging Face — which already helps developers run their AI models using rented computing power — could give Nvidia a way back into the cloud computing market without starting from scratch, since Nvidia reportedly scaled back its own cloud business, called DGX Cloud, about a year ago.

On its side, Nvidia has already poured tens of billions of dollars into building its own open-source AI models.

Not surprisingly, Hugging Face CEO Clem Delangue has spent much of this year publicly aligned with Nvidia’s open-source push. In this regard, Hugging Face used an Nvidia-modified version of a Chinese open-source model to defend itself after a cyberattack.

On the other hand, Chinese labs like Moonshot AI had released systems — such as its Kimi K3 model — that matched leading U.S. models on benchmarks while costing much less to run.

The price marks a huge jump from Hugging Face’s last known value. The company raised $235 million in a 2023 funding round, valuing it at $4.5 billion. That round was led by Salesforce Ventures, with money also coming from Alphabet’s GV, IBM Ventures, and Nvidia, among others.

Hugging Face generates only about $150 million in annual revenue, up from roughly $100 million just two months earlier.