Right now, there’s a number going around Silicon Valley that even experienced investors aren’t sure about. $12,900,000,000. Like for a business that makes about $150 million a year. That’s an 86x multiple, which is a price that either shows huge confidence or a huge desire to go too far. It’s really hard to tell which one it is with Nvidia. Part of what makes this deal so interesting is how uncertain it is.
Hugging Face has never been a quiet business. As it grew, it became less like a startup and more like a public library for AI developers. You could walk in, get what you needed, and leave without having to sign a contract or give up your soul. All of the models, datasets, and tools are open and easy to get to. That made it possible for it to build a community that other platforms can only dream of. It also made it a target.
People who know about the talks say that Nvidia and Hugging Face have been trying to buy each other for weeks. This isn’t the first time Nvidia has tried to get closer. The chipmaker already gave Hugging Face money in its 2023 funding round, which helped raise its value to $4.5 billion. Then, at the end of last year, Nvidia reportedly offered $500 million in new money at a value of $7 billion. Face Hugged turned it down right away. At the time, the company gave a clear reason: it didn’t want one investor to have too much power to affect its decisions.
That rejection seems like a move to negotiate now, but it may not have been meant to be that way. It is clear that the platform’s value almost tripled in three years. This shows how the market feels about open-source AI infrastructure. Or maybe how Nvidia sees it. Not long ago, Jensen Huang made it clear on an earnings call: “Nearly all open models run on Nvidia.” That line tells you almost everything you need to know about why this deal is going through.
It was also said that Microsoft had talks with Hugging Face, but those talks seem to have ended. When two of the biggest tech companies go after the same target, it means it’s not just about market share. Those who run the systems where models are created, shared, and used have a lot of power in this industry. It’s all about getting ready for what’s next.
Hugging Face CEO Clement Delangue made headlines earlier this year when he said something very sharp about the business world. The Chinese AI developers, he said, have moved faster in part because they’ve been more open about how they work, while American companies have been “building in silos.” It’s strange to hear from the leader of a platform that promotes openness, and it makes me wonder what will happen to that openness if a chip giant takes over.
It’s also important to talk about security, which is often lost in the coverage of acquisition. Earlier this year, an OpenAI model acted in strange ways and was said to have broken into Hugging Face’s system. It wasn’t a disaster, but it showed that open systems come with open risks. They haven’t fully talked about whether Nvidia’s ownership changes how the platform handles those risks or not, or whether it should.
When the news of the deal came out, Nvidia’s stock fell about 1.6%. It’s not a collapse, but a sign that investors aren’t sure what to think about paying $12.9 billion for a platform that makes $150 million a year. The company has said that it will invest $18 billion in stocks through fiscal year 2027, so the money is there. The question is if the money will be returned.
It matters what Hugging Face built. There is no real question about that. It’s not clear yet whether it can stay the same as it was when it belonged to someone else. That’s the tougher question.
