Nvidia may be taking one step closer to dominating the open-source AI ecosystem.
The tech giant has agreed to buy Hugging Face, the dominant repository of open-source AI models, for $12.9 billion, according to a report by The Information, citing a source familiar with the agreement. This is a strategic move that allows Nvidia to diversify its portfolio from just chipsets and take ownership of more of the AI stack.
This would give Nvidia ownership over the "front door for open AI innovation," Ashish Nadkarni, Group VP of enterprise infrastructure at IDC, told The Deep View. "Owning that front door gives NVIDIA a major position in the mindshare of today's AI development personas."
The deal comes as Nvidia faces mounting pressure from the very labs that rely on its chips. Google, OpenAI, and Anthropic are each moving toward custom or co-designed AI silicon, a shift that threatens Nvidia's near-monopoly on AI hardware. Worse for Nvidia, these labs bring something it can't easily replicate: deep, firsthand knowledge of the models the chips are meant to run, letting them tune hardware for performance in ways a general-purpose chipmaker can't match.
Hugging Face could eventually become a non-chip source of revenue for Nvidia, which could spur more growth if chip revenue eventually stops skyrocketing. A small caveat, however, is that, according to the report, Hugging Face has only generated $150 million in annualized revenue thus far. That makes Nvidia's payment about 80 times the startup's forward revenue, the report notes.
Revenue aside, the advantage of being both a model and chip maker is a key reason Nvidia has invested heavily in open-source models. Nvidia's commitment has been reflected not only in signing an open letter supporting the ecosystem, but also in internal investment in and development of open-source models, such as its Nemotron models. Of course, the Hugging Face acquisition moves that forward.
Additionally, there's a significant robotics angle: Nvidia already has a strong position with its Jetson, Isaac, and Omniverse solutions, and Hugging Face's own robotics efforts give Nvidia another point of leverage as physical AI becomes the next frontier. And just today, Hugging Face unveiled Microduck, a $399 open-source robot that learns new tricks via reinforcement learning. Even its looks resemble the Nvidia "Blue" research robot, inspired by Star Wars' BD-1, shown at demos, live events, and Disney.
Still, as Nadkarni highlights, the acquisition would also mean there would be less choice in the industry.
"To the extent that others like Intel, Apple, and AMD make similar plays, there will be fewer “ecosystem-neutral” platforms in the market," said Nadkarni. "Note how Microsoft has gradually made GitHub more like an extension of its own strategy (and for its own benefit)."
Our Deeper View
This is a landmark move for Nvidia, as it solidifies its efforts to be not just a chip company, but one that aims to own multiple layers of the AI stack at once. Hugging Face has become something like the GitHub of AI: serving as the industry's central hub for sharing models, datasets, and applications. Owning that layer, on top of the hardware layer Nvidia already dominates, deepens the moat. Already, nearly every open model runs on Nvidia GPUs, and buying the platform where those models live removes any ambiguity. It's also a defensive play: as OpenAI, Anthropic, Google, and Amazon push to build their own custom chips, controlling the distribution layer keeps developers tied to Nvidia's ecosystem regardless of who's building the silicon.