Nvidia buys Hugging Face.
Nvidia Agrees to Acquire Hugging Face for $11.9 Billion in Major AI Expansion
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Key Points
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Nvidia reported a 75% gross margin in its latest quarter and guided for third-quarter revenue of $108 billion, indicating continued sequential growth despite the expected longer-term slowdown.
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Hugging Face hosts more than 3 million AI models and serves over 18 million developers, researchers and creators; more than 200,000 companies use the platform to evaluate, adapt and deploy models.
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The Hugging Face transaction is expected to close in the first half of 2027, subject to regulatory approvals.
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Hugging Face was recently generating more than $150 million in annualized revenue, making Nvidia’s $11.9 billion shareholder payment roughly 79 times that revenue run rate—or about 86 times revenue when potential employee awards are included.
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The potential $1 billion employee-equity package amounts to more than 8% of the shareholder purchase price, underscoring Nvidia’s effort to retain Hugging Face’s personnel as well as acquire its platform and technology.
Nvidia agreed to acquire Hugging Face, a major AI model platform, for $11.9 billion plus up to $1 billion in employee equity awards. The deal would expand Nasdaq Nvidia's reach from AI chip dominance into model development and deployment, strengthening its position as rivals like Amazon develop their own AI chips.
Nvidia's stock looks cheap by historical standards. The company reported Yahoo Finance $96.2 billion in revenue last quarter—106% growth year-over-year—with a 75% gross margin. Its forward price-to-earnings ratio has fallen into the low 20s, lower than competitors Broadcom and AMD, even as growth is expected to slow to roughly 70% annually.
Hugging Face Brings 18 Million Users Under Nvidia
Hugging Face is no small acquisition. The platform hosts more than 3 million AI models and serves over 18 million developers, researchers, and creators. More than 200,000 companies use it to evaluate, adapt, and deploy models. Nvidia gains access to one of the largest developer ecosystems in AI.
The price tag is steep relative to current revenue. Nasdaq Hugging Face generated more than $150 million in annualized revenue, making Nvidia's $11.9 billion payment roughly 79 times that figure—or 86 times when employee awards are included. The $1 billion employee-equity package alone represents over 8% of the shareholder purchase price, showing Nvidia's commitment to keeping talent onboard.
Defending Against Amazon and Other Chip Rivals
Nvidia faces mounting competition. Yahoo Finance Amazon, Google, and others are building custom AI chips to reduce dependence on Nvidia's expensive processors. By owning Hugging Face, Nvidia can integrate its chips deeper into the model-building workflow and make switching costs higher for customers.
The acquisition also locks in a key distribution channel. Companies using Hugging Face will be nudged toward Nvidia's hardware for training and deployment. This makes Nvidia's ecosystem stickier even as competitors erode its pure hardware advantage.
Growth Expected to Cool, But Not Collapse
Nvidia guided for third-quarter revenue of $108 billion, Nasdaq signaling continued sequential growth. However, the company expects annual growth to slow from triple digits to roughly 70%—still rapid, but a meaningful deceleration. Sustained demand and flawless execution will matter more as the growth rate normalizes.
At current valuations, the stock appears priced for success but not perfection. Forward P/E in the low 20s leaves little room for earnings disappointment. The Hugging Face deal closes in the first half of 2027, subject to regulatory approval, giving Nvidia time to prove it can manage integration while sustaining growth.
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