Nvidia to buy Hugging Face for $13 billion in massive AI bet: What's behind the deal?

Nvidia is buying Hugging Face for nearly $13 billion, making one of the biggest bets yet on the open-source side of the artificial intelligence race.

The deal values the AI platform at about $12.93 billion, even though its annualized revenue was reported at around $150 million.

So why is Nvidia willing to pay so much?

Hugging Face has become one of the main places where AI developers find, share and test models. Unlike companies such as OpenAI and Anthropic, which keep their leading models largely closed, Hugging Face is heavily focused on models that developers can download, modify and run themselves.

The platform has more than 18 million developers, researchers and creators using it, with more than 3 million AI models, 500,000 datasets and 1 million applications hosted on the site.

For Nvidia, that community could be just as valuable as the platform itself.

The chipmaker has dominated the hardware side of the AI boom, but some of its biggest customers are now working on their own chips to reduce their dependence on Nvidia.

Open AI models could help Nvidia keep that ecosystem growing because developers still need computing power to train and run them.

Nvidia CEO Jensen Huang said Hugging Face will remain an open platform after the acquisition and that users will not be forced to use Nvidia chips.

The deal includes about $11.9 billion for Hugging Face shareholders, with another $1 billion in equity-based retention awards for employees who join Nvidia.

It is a huge jump from Hugging Face’s last disclosed valuation. It was valued at $4.5 billion in 2023 after raising $235 million from investors including Nvidia, Amazon and Salesforce.

The acquisition is expected to close in the first half of 2027, subject to regulatory approval.