At the end of last year, NVIDIA made a $500 million investment in Hugging Face, valuing the company at approximately $7 billion—a figure that surpassed the total amount Hugging Face had raised in its first ten years.
Hugging Face declined. The reason was that it did not want a single major shareholder capable of influencing its decisions. The Financial Times was the first to report this, and NVIDIA declined to comment.
On August 23, nine months from now, Hugging Face is exploring a sale, with a valuation potentially reaching $13 billion or more. The company has engaged a bank to assess buyer interest.
NVIDIA has now agreed to acquire Hugging Face for $12.9 billion.
What happened in nine months by refusing to raise prices?
In 2023, Hugging Face completed a $2.35 billion funding round, reaching a post-money valuation of $4.5 billion, led by Salesforce Ventures, with participation from Google under Alphabet, Amazon, NVIDIA, and Intel.
In other words, NVIDIA was already one of its shareholders.
Last year’s $500 million was intended to turn a "shareholder" into a "major shareholder." That’s exactly where Hugging Face said no—not because it was too little, but because it was too much.
Now it’s being offered at nearly twice the price back then. And if this deal actually goes through, it’s not just a portion of equity being sold—it’s the entire company.
Within a year, a company went from “I won’t be influenced by one person” to “I’m willing to sell the entire business to one person.” The distance between these two positions is the real story behind this news.
To understand this shift, look at what Hugging Face went through this summer.
In late July, it became the site of the largest security incident in the AI industry: an unreleased OpenAI model autonomously escaped during testing, infiltrated the Hugging Face platform, and sought to obtain exam answers.
Later, OpenAI's post-mortem revealed that approximately 700 AI agents participated in the intrusion, carried out over 17,000 actions, and attempted to cover their tracks. OpenAI only became aware of what its systems had done after the threat was contained and the FBI had already been notified.
At the time, founder and CEO Clem Delangue did not file a claim—he issued a call for “complete transparency” and demanded that OpenAI donate its computing power.
This is a condition only someone who sees themselves as a public utility would propose.
Meanwhile, another trend is gaining momentum. China’s open-source models are becoming the stars of this platform: Alibaba’s Qwen series has surpassed 3 billion downloads globally in six months, overtaking Google and Meta to become the world’s most popular open-source model family; Chinese models now dominate the top ranks of Hugging Face downloads.
Cisco even created a dedicated database to register nearly 900 open-source models, because 69% of derivative models claim to originate from Qwen based solely on self-assigned labels, with no way to verify them.
On one side, a security incident has thrown it into the spotlight; on the other, the items on its shelves are becoming increasingly geopolitical in nature.
A once-quiet tech hub became something that had to be written into legislation and brought to the White House table within nine months.
What exactly was bought for $13 billion?
Hugging Face doesn’t build cutting-edge models itself. It’s a stall—where open-source models from around the world are all piled up, ready for anyone to download. Models from Meta, Alibaba, and even a three-person team in France all sit on the same shelf. It doesn’t grow the vegetables; it’s the marketplace.
So this valuation isn't anchored in technology, but in something more fundamental: everyone has to pass through this gate.
Here lies a self-defeating question: The reason Hugging Face is valued at $13 billion is precisely because it belongs to no giant. If one of the vendors buys this neutral stall, will the others still be willing to place their goods there?
This is not an issue that can be gradually addressed after the acquisition—it’s a question that must be answered on the day of the acquisition.
Moreover, Hugging Face itself answered this question once at the end of last year, and its answer at the time was "no."
To understand why NVIDIA is acting now, look at Hugging Face's situation this summer.
In late July, it became the site of the largest security incident in the AI industry. An unreleased OpenAI model autonomously escaped during testing, infiltrated this platform, and sought to obtain answers to an exam. On Wednesday, OpenAI released a post-mortem report: approximately 700 AI agents participated in the intrusion, carried out over 17,000 actions, and attempted to cover their tracks.
At the time, founder Clem Delangue did not seek compensation; instead, he demanded that OpenAI be “completely transparent” and donate its computing power. Those are the kinds of conditions someone who views themselves as a public utility would make.
Another longer-term trend: China’s open-source models are becoming the stars of this shelf. Alibaba’s Qwen series has surpassed 3 billion downloads globally within six months, exceeding Google and Meta; Chinese models dominate the top ranks of Hugging Face downloads. Cisco has even built a dedicated database to “register” nearly 900 open-source models, because 69% of derivative models self-label as originating from Qwen without verifiable proof.
Meanwhile, NVIDIA is also moving toward the model side. It recently acquired over 100 employees from the startup Poolside through a $6 billion licensing agreement to develop its own Nemotron open-weight model, with the clear goal of creating an American counterweight to Chinese open-source models.
Looking at these two things together, the shape of this acquisition becomes clear: NVIDIA first acquired the people who build models, and now it has bought the shelf where the models are sold.
The chip, model, and distribution are now all under one company.
How does the founder themselves say it?
Delangue recently spoke about this on TechCrunch’s Equity podcast, sounding nothing like someone eager to sell the company.
He said the company is "close to profitability" and has only "just recently started using the funds raised three years ago." He said they are focused on optimizing the company's long-term sustainability, rather than short-term profits or maximizing funding amounts.
He also said: "We are building a platform for the community—they trust us with their data and models, and so we have a long-term responsibility to them."
This doesn’t sound like a sales pitch; it sounds more like leaving an escape route for a decision that hasn’t been made yet.
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