Nvidia Confirms The Acquisition Of Hugging Face For Almost $13 Billion. Its Stock Is Edging Up.

Nvidia announced the acquisition of Hugging Face on Wednesday for $12.9 billion, with CEO Jensen Huang saying the open-source AI platform will remain open "for the entire AI ecosystem."

"Hugging Face will continue to support open source and open weight models from across the ecosystem, from every model builder," Huang said in a blog post discussing the decision.

"Together, we will scale Hugging Face's platform, strengthen its infrastructure and expand access to AI for developers and institutions worldwide," he added. The company's stock edged up after the decision, climbing 0.25% at 8:42 a.m. ET.

Speaking to CNBC, Hugging Face CEO Clément Delangue said that during the summer "we realized that Hugging Face and open source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility." He went on to say that he approached the company because he thought it was a "perfect home" for the company and discussions unfolded quickly.

The agreement was reported by The Information last week. Hugging Face had become a central platform for developers to share, test and deploy AI models and datasets. Nvidia already had a relationship with the company, having participated alongside Salesforce, Google, Amazon and others in a $235 million funding round in 2023 that valued Hugging Face at $4.5 billion.

The two companies have also worked together commercially. In 2023, Nvidia announced a partnership that connected Hugging Face users with its DGX Cloud infrastructure, allowing developers to train and customize generative AI models using Nvidia computing.

Hugging Face previously resisted a larger Nvidia investment. The startup rejected a $500 million offer last year that would have valued it at $7 billion because it did not want one investor gaining too much influence over the business, the Financial Times reported. The platform had about 13 million users and hosted roughly 2.5 million public AI models at the time.

Nvidia is using its enormous cash generation to expand beyond the processors that power much of the AI industry. The company has increasingly invested in model developers, infrastructure providers and other companies across the sector.

Hugging Face, meanwhile, has been generating roughly $150 million in annual revenue and is nearing profitability, TechCrunch reported. At $12.9 billion, Nvidia's purchase price is almost three times the startup's valuation in its last major funding round.

It is Nvidia's second largest acquisition on record following the $20 billion purchase of chipmaker Groq.