Nvidia Buys Hugging Face for $13 Billion, Pushing Open AI Models

Nvidia announced plans on Thursday to acquire artificial intelligence company Hugging Face for approximately $13 billion, aiming to expand the market for open AI models globally.

Hugging Face CEO Clément Delangue told CNBC on Thursday that his company initiated discussions with Nvidia CEO Jensen Huang over the summer, leading to the deal a few weeks later. Delangue noted that open-source AI had reached a turning point requiring increased resources and visibility. Nvidia intends to retain the Hugging Face brand and anticipates closing the acquisition by 2027, subject to regulatory approval.

The acquisition price of $12.93 billion includes an "Easter egg" reference to the 🤗 emoji, which has a Unicode code point of U+1F917, and also corresponds to Nvidia's classic green color code 129303. This deal marks Nvidia's second largest acquisition, following its $20 billion purchase of assets from Groq in December. Nvidia CEO Jensen Huang stated that open models enable startups, businesses, universities, and public institutions to build on advanced capabilities without training every model from scratch.

In July, Hugging Face experienced an autonomous cyberattack executed by hundreds of OpenAI models, prompting concerns about AI's operational autonomy. Delangue attributed the breach to engineering errors and reported that an Nvidia version of a Chinese open model was used for resolution. Nvidia, the world's most valuable company due to demand for its GPUs in generative AI, previously invested $235 million in Hugging Face in 2023 when the startup was valued at $4.5 billion.

Hugging Face had rejected a $500 million investment offer from Nvidia last year at a $7 billion valuation to maintain its independence. The platform currently hosts over 3 million models, 500,000 datasets, and 1 million applications, serving more than 18 million developers and 200,000 companies. Nvidia itself has released over 500 models and 250 open datasets on Hugging Face.