Nvidia has reportedly agreed to acquire Hugging Face, the open-source AI hub, for $12.9 billion, according to a report by The Information on Wednesday night. However, Business Insider reported that a signed agreement has not yet been produced, and talks could still fall through.
The acquisition would provide Nvidia with a stronger presence in open-source AI, a sector where developers are working to match closed AI systems from companies like Anthropic and OpenAI. This move is seen as a way for Nvidia to protect its dominant position in AI chips, as major closed-source AI labs are developing their own chips to reduce reliance on Nvidia.
The deal could also mark Nvidia's return to cloud computing. Nvidia reportedly scaled back its DGX Cloud business about a year ago, but owning Hugging Face, which assists developers in running AI models using rented computing power, could offer a path back into this market. Additionally, the acquisition could enable Nvidia to sell unused computing capacity to Hugging Face's customers, addressing potential costs from its cloud computing deals.
Hugging Face's last known valuation was $4.5 billion in 2023, following a funding round that raised $235 million. The company reportedly generates around $150 million in annual revenue, up from approximately $100 million two months prior, and is nearing profitability.