It has been reported that Nvidia is close to buying the open-source AI hub Hugging Face for 12.9 billion dollars, according to a report by The Information.
If the deal proceeds, the main supplier of AI processors will obtain control of one of the most important centres for sharing open AI models and for supporting developer collaboration.
As reported by The Information, Nvidia has agreed to the purchase based on information given by a person who was aware of the agreement, while Business Insider’s account is more cautious in saying that the two companies had carried out serious discussions at a valuation above $13 billion but had not in fact signed the deal. Neither company has publicly confirmed the reports.
If the share price ends up at the stated level, then Hugging Face will have become the largest takeover ever carried out by Nvidia.
Nvidia’s Reported Hugging Face Deal and Why the AI Hub Matters
The amount of $12.9 billion would exceed the $7 billion that Nvidia spent to acquire Mellanox in 2020; according to The Information, Hugging Face recently achieved annualized revenues of about $150 million, which means the stated price represents roughly 86 times that amount.
In its last funding round, Hugging Face obtained $235 million at a valuation of $4.5 billion in 2023, with Nvidia joining Salesforce, Google, Amazon, AMD, Intel, Qualcomm, and IBM as investors. Nvidia can afford the deal since it has just reported quarterly revenue of $96.2 billion and net income of $59.7 billion.
Hugging Face is frequently referred to as the GitHub for AI, offering a central platform on which developers can publish, discover, test and deploy models and datasets. The company states that its community included 13 million users, more than two million public models, and over 500,000 public datasets by 2025.
Nvidia and Hugging Face’s Partnership, Ownership Concerns, and Antitrust Risk
Nvidia and Hugging Face have already worked together; in 2023 they set up a partnership which linked Hugging Face models to Nvidia’s DGX Cloud for the purposes of training and fine-tuning, and subsequently the two companies moved on to offer on-demand training clusters.
Since then Hugging Face has also collaborated with AMD, AWS, and Google, which raises concerns about platform neutrality if the dominant chip supplier in the AI industry ends up owning Hugging Face.
The fact that Nvidia has acquired Hugging Face will give it more influence over how developers search for, share, optimise and deploy AI models. This move is consistent with CEO Jensen Huang’s open support for open models, as he believes that such an approach promotes AI adoption and thus results in higher demand for chips and data centres.
Moreover, Nvidia and Hugging Face have also signed the same industry letter in which they urge US policymakers to make sure that advanced model weights stay accessible.
Siddy Jobe, a fund manager with the Eonopolis Exponential Technologies funds, stated on CNBC that Nvidia is very much a community and a platform-oriented company and that Hugging Face is precisely the type of company it is.
He also said that it is clear that Nvidia wants to be integrated at every level of the stack, from energy all the way through to foundational models and on to applications.
It is reported that Hugging Face turned down an Nvidia investment of $500 million at a company valuation of $7 billion last year since it did not want a single major shareholder to have an influence on decisions. Full ownership would once again give rise to that concern and regulators might agree.
The same kinds of concerns existed regarding Nvidia’s proposed acquisition of Arm, a transaction valued at $40 billion, which fell through in 2022 because of international antitrust pressure.
What Nvidia and Hugging Face Have Not Confirmed
Nvidia and Hugging Face have not publicly confirmed the reports, the two sources differing in that The Information speak of an agreement while Business Insider describe serious discussions without a signed deal.
It has not yet been determined what the final price will be, whether the deal will actually go through, and how it will affect Hugging Face’s neutral position with regard to Nvidia’s competitors such as AMD and Google.
A transaction of this scale would probably come under antitrust scrutiny, as was the case with Nvidia’s acquisition of Arm in 2022.
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