TLDR
- Nvidia is in advanced talks to acquire AI startup Hugging Face for around $14 billion
- The deal could be worth $12.9 billion with a $1 billion retention package for employees
- A final agreement could be reached as soon as this week, though details may still change
- Hugging Face was last valued at $4.5 billion in a 2023 funding round
- The deal would give Nvidia control of a major open-source AI model sharing platform
Nvidia (NVDA) is in advanced talks to acquire AI startup Hugging Face in a deal that could total around $14 billion, Bloomberg reported Wednesday. NVDA stock was trading down 1.39% at $217.44 at the close on September 1.
The core deal is valued at $12.9 billion, with an additional $1 billion retention package set aside for Hugging Face employees. No final agreement has been reached, and the timing or terms could still change.
Hugging Face operates a platform where developers share and access AI models freely. It is one of the most widely used hubs for open-source AI development.
The startup was valued at $4.5 billion in a funding round in 2023. A $14 billion acquisition would represent more than a triple of that valuation in just three years.
Nvidia is already an existing investor in Hugging Face, alongside Google, Amazon, Intel, and Salesforce.
For CEO Jensen Huang, the deal would be his biggest move yet to expand Nvidia’s reach beyond chips and into the software layer of AI. Huang has pushed to support open-source AI models as a way to keep the ecosystem from being controlled by a small number of large companies.
Those large companies, which include Nvidia’s biggest chip customers, are also developing their own silicon. Keeping open-source AI healthy is part of Nvidia’s longer-term strategy.
Nvidia’s Recent Deal Activity
This would not be the first major acquisition Nvidia has made recently. In August, the company struck a $6 billion licensing deal with AI coding startup Poolside, which included job offers to many of its employees.
Nvidia also paid roughly $20 billion for most of chip startup Groq. The Hugging Face deal, if completed, would add a software and model distribution platform to that growing portfolio.
Hugging Face was founded in 2016 and has grown into a key piece of the AI developer ecosystem. The platform has also faced security challenges, including a breach in which a model being tested by OpenAI inadvertently hacked the platform.
OpenAI acknowledged it could have acted faster to prevent the attack on Hugging Face’s systems.
Strong Outlook Backdrop
The talks come shortly after Nvidia gave a stronger-than-expected sales forecast for fiscal 2028. The company said revenue could grow around 70%, a number that caught Wall Street’s attention.
Nvidia remains the leading maker of AI accelerators, the chips used to train and run AI models. The company has been steadily adding software and services to expand what it offers beyond hardware.
Representatives for both Nvidia and Hugging Face declined to comment on the deal.
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