Nvidia wants to buy Hugging Face in $13 billion blockbuster AI deal

Nvidia is reportedly preparing to acquire Hugging Face for $12.9bn
A 2023 investment round valued the company at $4.5bn
Nvidia is on a roll of investing heavily in other companies

Nvidia has reportedly spent the past couple of weeks actively engaging with Hugging Face to explore an acquisition deal worth an estimated $12.9 billion, according to Business Insider reporting, citing an unnamed source familiar with the matter.

To date, the companies are yet to reach an agreement, but with the current valuation speculations, it would make a Hugging Face acquisition one of Nvidia’s largest acquisitions to date.

Importantly, this wouldn’t be the chipmaker’s first run-in with Hugging Face – it took part in a $235 million funding round in 2023. At that time, Hugging Face’s valuation was around $4.5 billion – making today’s valuation nearly three times higher.

Nvidia and Hugging Face

While this may be one of Nvidia’s biggest acquisitions to date, it’s just one of a growing number, as the company recently admitted it had $18 billion committed to equity investments for the rest of the financial year, and it already holds $47.9 billion in private company stock.

However, there’s still a shadow over the potential Nvidia acquisition, with Hugging Face previously turning down a $500 million Nvidia investment over concerns that a single shareholder could have such a big influence.

The high valuation also makes the prospective acquisition a costly one – at around 86x Hugging Face’s annualized revenue ($150 million), Nvidia would be paying a premium for the platform’s strategic position and existing relationships, against a backdrop of ongoing investments in models and development tools.

Regulator scrutiny might also question whether competing chipmakers and cloud service providers could be put at a disadvantage, particularly if Nvidia imposes hardware and software restrictions on the platform after a takeover.