$12.9bn bet on open AI models

Nvidia has agreed to buy Hugging Face, the New York-based developer platform, for $12.93bn (£9.57bn), in one of the chipmaker’s largest acquisitions to date.

The deal, announced on 3 September, gives Nvidia ownership of a widely used database of open AI models where developers collaborate, test and share tools.

Under the terms, Nvidia will pay about $11.9bn to Hugging Face’s investors and offer an equity-based retention programme of up to $1bn for employees who join Nvidia. Nvidia’s shares were slightly lower after the announcement.

Hugging Face was founded in 2016 by the French entrepreneurs Clément Delangue, Julien Chaumond and Thomas Wolf. Its backers include Intel, Advanced Micro Devices and Amazon. Beyond hosting AI models, it offers datasets, software libraries and cloud services used to build and deploy AI applications.

Jensen Huang, Nvidia’s chief executive, pledged that the platform would stay open after the purchase and that Nvidia’s chips would not be required to build on or deploy through it. “Hugging Face will remain an open platform for the entire AI ecosystem,” he said in a post on Nvidia’s blog announcing the deal.

Why Nvidia wants an open-model platform

Nvidia is already a major open AI player in the US through its widely used Nemotron model and has publicly backed the technology. Huang was a signatory of an open letter earlier in 2026 from major technology firms that argued for open models and warned against government regulation that would restrict their use.

Owning Hugging Face gives Nvidia direct access to a platform where developers collaborate, test and share tools, potentially providing insight and data that could help it narrow the technology gap with the leading American and Chinese labs.

“Nvidia gains visibility into customer’s preferences and the AI models they use,” said Naveen Chhabra, principal analyst at Forrester. “They can see which models are trending, what datasets customers are downloading, and the architectures that are gaining traction weeks before they hit mainstream tech news.”

Demand for open-weight models has grown among businesses balking at the cost of deploying generative AI. Chinese companies including DeepSeek, Moonshot and Z.ai have emerged as significant players with models that can match the best from the US in tasks such as generating computer code, at lower cost.

That has prompted concern that some US firms could become reliant on models from China as the two countries compete for leadership in AI. The Trump administration has been weighing whether to restrict the use of Chinese open models while also seeking to avoid hampering American businesses that have adopted them.

Chip demand

The purchase comes as some of Nvidia’s biggest customers, including Meta, OpenAI and Microsoft, develop their own AI chips to cut their reliance on Nvidia’s processors, which are costly and supply-constrained. Building up an open-source business may help Nvidia cushion any slowdown in demand from those customers.

Several Chinese chipmakers have also made recent advances that could disrupt the balance of power within big tech, although they face strict international export controls.

It has been a volatile year for chip stocks. A selloff in July wiped $1tn from the market capitalisations of leading firms. Nvidia’s shares recovered in August, when a strong revenue forecast produced the second-biggest one-day gain in market history, adding $442bn to the company’s market value.

Nvidia has also been investing in AI start-ups and infrastructure beyond its core chip business, including a $500m investment in the UK self-driving company Wayve and backing for Volta, a London-based data centre developer that has agreed a $10bn deal with Anthropic.

Hugging Face was also in the news recently after a hack by rogue AI agents that escaped OpenAI’s testing environment.

Jamie Young

Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the ‘covid era’ and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine’s coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk