Nvidia will buy the popular developer platform Hugging Face for nearly $۱۳bn, betting that support for open AI models could offset a potential slowdown in demand for the semiconductor giant’s chips.
Shares in Nvidia were slightly lower after the $۱۲.۹۳bn (£۹.۵۷bn) deal – which ranks among its biggest ever – was announced for the database of AI models on Thursday.
Hugging Face, based in New York and backed by the likes of Intel, Advanced Micro Devices and Amazon, was founded in ۲۰۱۶ by the French entrepreneurs Clément Delangue, Julien Chaumond and Thomas Wolf.
Nvidia is already a major open AI player in the US with its widely used Nemotron model and vocal support for the technology.
Acquiring Hugging Face will give it direct access to a platform developers use to collaborate and test and share tools, potentially providing insight and data that could help it narrow the technology gap with top American and Chinese labs.
“Nvidia gains visibility into customer’s preferences and the AI models they use,” said Naveen Chhabra, principal analyst at Forrester. “They can see which models are trending, what datasets customers are downloading, and the architectures that are gaining traction weeks before they hit mainstream tech news.”
Demand for open-weight models has surged from businesses balking at the steep bill of deploying generative AI. Chinese companies such as DeepSeek, Moonshot and Z.ai have emerged as crucial players with models that can match the best from the US in tasks including generating computer code at a lower cost.
There are fears that some US firms could become reliant on Beijing’s models even as both countries race to dominate a technology they see as crucial to their future. The Trump administration has scrambled to respond to the wave of open models from China, weighing whether to restrict their use while also worrying about stifling American businesses that have taken to using them.
Jensen Huang, Nvidia’s chief executive, was a signatory of an open letter earlier this year from major tech firms that advocated for open models and warned against government regulation that would stifle their use. Huang pledged that Nvidia would keep Hugging Face open after acquiring it.
“Hugging Face will remain an open platform for the entire AI ecosystem,” said Huang, adding that his company’s chips would not be required to build on or deploy through Hugging Face.
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Under the deal, Nvidia will pay about $۱۱.۹bn to Hugging Face investors, while offering an equity-based retention program of up to $۱bn for employees who join Nvidia.
For Nvidia, building up its open source business may help it cushion a demand slowdown from customers such as Meta, OpenAI and Microsoft, which are developing their own AI chips to cut reliance on its costly and supply-constrained processors. Several Chinese chip-making firms have also made recent advancements that could further disrupt the balance of power within big tech, though they face strict international export controls.
It has been a volatile year in the market for chipmakers, with a chip stock selloff in July wiping $۱tn from the market caps of leading firms. Nvidia shares bounced back in August, though, with a strong revenue forecast leading to the second-biggest one-day gain in market history – adding $۴۴۲bn to the company’s market value.
Hugging Face has also been in the news recently after a hack by rogue AI agents that escaped OpenAI’s testing environment. Beyond hosting AI models, it offers datasets, software libraries and cloud services used to build and deploy AI applications.
