Nvidia May Be Paying 86 Times Sales for Hugging Face And It Might Actually Make Sense: Here’s Why

Nvidia may be set to pay $12.9 billion for Hugging Face, a company generating around $150 million in annualized revenue. This deal, reported by Reuters on August 27, has a valuation of roughly 86 times sales. Prior to this, the companies had not officially announced the deal, with Business Insider stating that discussions had not resulted in a signed agreement.

Hugging Face's platform allows developers to use various hardware, and it reportedly rejected an earlier $500 million investment from Nvidia due to a desire for a neutral investor. The decision to purchase Hugging Face could be driven by Nvidia's interest in influencing the development process from models to compute hardware. Nvidia has substantial financial resources, including $22.4 billion in cash and $34.1 billion in marketable debt securities, with $21.3 billion in free cash flow in Q2.

However, the success of this deal depends on maintaining Hugging Face's neutral position among hardware providers, model developers, and enterprise users.