Nvidia Reportedly Agrees to Acquire Hugging Face for 12.9 Billion Dollars, Nearly Triple Its 2023 Valuation
Nvidia has reportedly agreed to acquire open source artificial intelligence platform Hugging Face for 12.9 billion dollars, a transaction that would extend the world’s largest AI chip company further into the software, model distribution and developer layers of the AI ecosystem. Reuters reported that Nvidia had agreed to buy Hugging Face for 12.9 billion dollars, citing The Information and a person with knowledge of the transaction, while Bloomberg described Nvidia as nearing an agreement valued at roughly 13 billion dollars. Neither company has publicly announced the transaction or confirmed that it has closed, so the correct status is a reported agreement, not a completed acquisition.
The Reported Price Is Nearly Three Times the 2023 Valuation
Hugging Face raised 235 million dollars in 2023 at a valuation of 4.5 billion dollars, with Nvidia among the investors alongside companies including Salesforce and Alphabet’s Google. A 12.9 billion dollar acquisition price would be 2.87 times that valuation, an increase of approximately 187 percent in three years, on our calculation.
Reuters also reported that Hugging Face had previously rejected a 500 million dollar investment proposal from Nvidia in 2025 that would have valued the company at 7 billion dollars, citing an earlier Financial Times report. The reported acquisition price would be about 84 percent above that proposed valuation, on our calculation, suggesting the valuation increase accelerated sharply even after Nvidia had already become an investor and commercial partner.
The Implied Revenue Multiple Is About 86 Times
Hugging Face’s annualised revenue is estimated at approximately 150 million dollars. At a 12.9 billion dollar valuation, that implies a price of roughly 86 times annualised revenue, on our calculation, a very high multiple even by AI sector standards that suggests the economic rationale would lie primarily in Hugging Face’s strategic position rather than its current revenue base.
Hugging Face functions as one of the principal distribution and collaboration platforms for open AI models, datasets and developer tools. The two companies are not starting from zero: they announced a partnership in 2023 integrating Nvidia’s DGX Cloud infrastructure into the Hugging Face platform, which then had more than 250,000 shared models and 50,000 datasets, according to Nvidia’s own announcement at the time.
The Purchase Price Is Large for Hugging Face but Manageable for Nvidia
Nvidia reported 96.221 billion dollars of revenue in its fiscal second quarter ended July 26, up 106 percent from a year earlier, with Data Center revenue of 89.023 billion dollars and net income of 59.688 billion dollars. Against those numbers, the entire reported Hugging Face purchase price would equal only about 13.4 percent of one quarter of Nvidia’s revenue, 14.5 percent of one quarter of its Data Center revenue and 21.6 percent of one quarter of its net income, all on our calculation.
Nvidia is guiding for 108 billion dollars of third quarter revenue, plus or minus 2 percent, a further sequential increase of about 12.2 percent, on our calculation. Nvidia also has 18 billion dollars committed to equity investments through fiscal 2027, of which the reported Hugging Face price would represent about 71.7 percent, on our calculation, though the two figures should not be treated as the same funding pool.
Nvidia Moves Up the AI Stack
The strategic logic differs from simply acquiring another software company. Nvidia already dominates much of the computing infrastructure on which large AI models are trained and deployed, while Hugging Face sits closer to where developers discover, distribute and fine tune models. Nvidia has separately been strengthening its position in open source AI, launching the Nemotron Coalition in March to bring together AI laboratories around the development of open frontier models. Ownership of Hugging Face, if the reported agreement is confirmed, would connect Nvidia’s computing infrastructure, its growing open model strategy and one of the most widely used distribution platforms for independent AI developers.
Why it matters:
At an implied multiple near 86 times reported annualised revenue, the transaction is difficult to justify on Hugging Face’s present financials alone. The strategic value lies in the developer network and model distribution layer, and Nvidia would be paying to strengthen the ecosystem that ultimately drives demand for its own computing infrastructure.
Outlook:
The next decisive confirmation would be a statement from Nvidia or Hugging Face, a regulatory filing, or another sign that a definitive agreement has been signed. Until then, the transaction remains a reported deal rather than a completed one.
Sources: Reuters; Bloomberg; Nvidia.
