Nvidia Buys Hugging Face for 12 Billion

Nvidia is reportedly close to buying the open-source AI hub Hugging Face for $12.9 billion, according to a report by The Information.

If the deal proceeds, the main supplier of AI processors will obtain control of one of the most important centers for sharing open AI models and for supporting developer collaboration.

The amount of $12.9 billion would exceed the $7 billion that Nvidia spent to acquire Mellanox in 2020.

Hugging Face recently achieved annualized revenues of about $150 million, which means the stated price represents roughly 86 times that amount.

Hugging Face is frequently referred to as the GitHub for AI, offering a central platform on which developers can publish, discover, test and deploy models and datasets.

They state that their community included 13 million users, more than two million public models, and over 500,000 public datasets by 2025.

Nvidia and Hugging Face have already worked together; in 2023 they set up a partnership which linked Hugging Face models to Nvidia’s DGX Cloud for the purposes of training and fine-tuning.

This partnership will give Nvidia more influence over how developers search for, share, optimise and deploy AI models.

CEO Jensen Huang’s open support for open models promotes AI adoption and thus results in higher demand for chips and data centres.

Nvidia and Hugging Face have also signed the same industry letter in which they urge US policymakers to make sure that advanced model weights stay accessible.

Siddy Jobe, a fund manager with the Eonopolis Exponential Technologies funds, stated that Nvidia is very much a community and a platform-oriented company and that Hugging Face is precisely the type of company it is.

He also said that it is clear that Nvidia wants to be integrated at every level of the stack, from energy all the way through to foundational models and on to applications.

Concerns exist regarding the potential acquisition.

The same kinds of concerns existed regarding Nvidia’s proposed acquisition of Arm, a transaction valued at $40 billion, which fell through in 2022 because of international antitrust pressure.

A transaction of this scale would probably come under antitrust scrutiny.

It has not yet been determined what the final price will be, whether the deal will actually go through, and how it will affect Hugging Face’s neutral position with regard to Nvidia’s competitors such as AMD and Google.

Hugging Face turned down an Nvidia investment of $500 million at a company valuation of $7 billion last year since it did not want a single major shareholder to have an influence on decisions.

Nvidia can afford the deal since it has just reported quarterly revenue of $96.2 billion and net income of $59.7 billion.

In its last funding round, Hugging Face obtained $235 million at a valuation of $4.5 billion in 2023, with Nvidia joining Salesforce, Google, Amazon, AMD, Intel, Qualcomm, and IBM as investors.

Nvidia and Hugging Face have not publicly confirmed the reports, the two sources differing in that The Information speaks of an agreement while Business Insider describes serious discussions without a signed deal.

Regulators and competitors will respond to the potential acquisition as the situation develops.