Nvidia to buy Hugging Face for nearly $13 billion in big bet on open AI models

Nvidia announced it is acquiring Hugging Face for US$12.93 billion, marking one of the company's biggest deals to date. The move comes as Nvidia seeks to capitalize on the growing demand for open AI models, which users can freely download, run, and customize. Unlike closed systems like those from OpenAI and Anthropic, this acquisition will give Nvidia direct access to a platform where developers collaborate, test, and share tools using various open AI models.

Nvidia CEO Jensen Huang emphasized that Hugging Face will remain an open platform for the entire AI ecosystem, and Nvidia's chips will not be required to build or deploy through the platform. The acquisition is expected to provide valuable insight and data that could help Nvidia narrow the technology gap with top US and Chinese labs.

The deal is valued at a total of US$13 billion, with Nvidia paying approximately US$11.9 billion to Hugging Face investors and offering an equity-based retention program of up to US$1 billion for Nvidia employees. Hugging Face was valued at US$4.5 billion in its last funding round in August 2023, which raised US$235 million from investors including Salesforce, AMD, and Amazon.

Nvidia's financial strength is substantial, with US$22.44 billion in cash and cash equivalents as of its July quarter, more than double the US$10.61 billion it held in January. This financial capacity will allow the company to fund the acquisition and support its rapidly growing AI infrastructure business.

The acquisition aligns with Nvidia's strategy to build up open-source technologies, potentially shielding it from potential demand slowdowns from customers like Meta, OpenAI, and Microsoft, who are developing their own AI chips to reduce reliance on Nvidia's processors. Hugging Face not only hosts AI models but also offers datasets, software libraries, and cloud services for building and deploying AI applications.