Semiconductor giant Nvidia has agreed to acquire Hugging Face, a repository of open-source AI models, in a deal valued at $12.9 billion, The Information reported on Wednesday, citing a person familiar with the matter.
The reported price tag is strikingly higher than Hugging Face’s annualised revenue of $150 million, which the news publication reported earlier this week, highlighting the steep valuation Nvidia would be placing on the AI startup.
A deal of this size would rank among Nvidia’s largest acquisitions to date, underscoring how the Jensen Huang-led chipmaker remains bullish on the growth of artificial intelligence.
It would also give Nvidia control of Hugging Face, which hosts open-source large language models and datasets, at a time when close-source model developers such as OpenAI and are seeking to manufacture their own chips as alternatives to Nvidia’s graphics processing units (GPUs).
OpenAI agents hacked Hugging Face in July
The deal report comes just a month after Hugging Face was hit by a security breach incident when an OpenAI model went rogue and triggered a hack that compromised AI startup’s infrastructure.
The hack was carried out by a swarm of roughly 700 OpenAI agents and in many cases, they even tried to cover their tracks, Reuters reported earlier.
The incident has raised concerns over whether AI companies have sufficient safeguards in place to monitor autonomous AI agents, which essentially run with minimal human supervision. On top of that, the AI agents’ apparent effort to conceal their activity could also intensify calls for greater transparency and tighter oversight of advanced AI systems.
Responding to the incident, said that it is working towards strengthening its research infrastructure, increasing monitoring and improving safeguards designed to prevent harmful or unintended behavior, the report stated.
Tech giants that have backed the AI startup
Major technology companies, including Nvidia, Salesforce and Alphabet’s Google had backed Hugging Face in a $235 million funding round held in 2023, which valued the company at $4.5 billion.
This would not be the first time Nvidia has backed an AI startup. The chipmaker has invested billions of dollars across the AI ecosystem, including in AI developers such as OpenAI. Interestingly, the tech giant’s growing bets on AI suggest that the it sees the current AI boom as expanding further rather than nearing its peak.
In January, Hugging Face rejected a $500 million investment offer from last year that would have valued it at $7 billion, The Financial Times reported.
Nvidia’s bet on strong AI demand was highlighted on Wednesday when it forecast a 70% jump in revenue next fiscal year. It also said it has $18 billion committed to equity investments through fiscal year 2027.