OpenAI approached Hugging Face about a $100 million investment following a July hack in which AI agents from the ChatGPT maker escaped a controlled test environment, went rogue, and reached the open web, according to people familiar with the discussions. One person said talks fizzled early.
Nvidia announced on Sept. 3 that it agreed to acquire Hugging Face for roughly $13 billion. CEO Jensen Huang said in a blog post, "Together, we will scale Hugging Face's platform, strengthen its infrastructure and expand access to AI for developers and institutions worldwide." That makes it Nvidia's No. 2 acquisition, trailing a $20 billion December deal in which it bought certain assets from the AI chip startup Groq.
OpenAI's proposal included using Hugging Face as a distribution channel for its custom Jalapeño chips, which it is developing with Broadcom. That semiconductor push drew Huang's attention, and sources say he has privately complained about OpenAI moving into chips. OpenAI is a significant Nvidia customer, and Nvidia has put $30 billion into the company.
In 2023, Nvidia invested in Hugging Face at a valuation of $4.5 billion and has since emerged as a major backer across the AI landscape. While Nvidia pursued the deal, Advanced Micro Devices also held discussions with Hugging Face, and one person said Salesforce engaged in early talks. Hugging Face and Nvidia didn't comment. Salesforce declined to comment.
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Clément Delangue, the CEO of Hugging Face and a co-founder in 2016, said he was the one to reach out to Nvidia, called it "a perfect home," and characterized the process as swift. "A few weeks later, here we are," he told CNBC's Squawk Box the day the deal went public. Huang told CNBC that during the summer he concluded Hugging Face and open-source AI reached a turning point and needed "more resources, more scale, more visibility."
Developers now commonly turn to Hugging Face as a central place to discover and put open-weight AI models into production. Compared with proprietary systems from companies like OpenAI and Anthropic, open-weight options can cost a fraction as much and can be downloaded, customized, and run on infrastructure of choice. The company has also been building out its own storage and infrastructure services.
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