Nvidia, the world's most valuable company, is set to acquire Hugging Face, an open-source artificial intelligence platform, for $12.9 billion. This acquisition is a significant step for Nvidia, known primarily for its graphics processing units (GPUs) that power the generative AI boom, as it seeks to expand its influence further into the AI software stack. The deal includes an equity-based retention program of up to $1 billion for Hugging Face employees.
This transaction marks Nvidia's second-largest acquisition on record, following its $20 billion purchase of assets from chipmaker Groq last year. Prior to that, its largest deal was the $7 billion acquisition of Israeli chipmaker Mellanox in 2019. The acquisition price of Hugging Face is almost double the $7 billion valuation the company received just last year when it reportedly turned down a large investment from Nvidia to maintain independence.
Hugging Face, known for hosting millions of open AI models, datasets, and applications, is a champion of "open" AI systems. Nvidia CEO Jensen Huang emphasized that Hugging Face will remain an open platform, aiming to scale its infrastructure and expand access to AI for developers globally. This move is expected to generate new demand for Nvidia's core chip business by fostering a broader open-source AI ecosystem, thereby reducing its reliance on a few major customers like OpenAI and Anthropic. The deal is projected to close by 2027 and will face scrutiny from competition regulators.
