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Nvidia pays $12.9 billion for the Hugging Face hub OpenAI wanted as a chip outlet

Nvidia is paying about $12.9 billion for Hugging Face after OpenAI offered $100 million to make the open-model hub an outlet for its own chips. Hugging Face's CEO says he approached Nvidia himself, so the case that Nvidia bought it to block OpenAI's chips rests on timing.

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Illustration accompanying Nvidia pays $12.9 billion for the Hugging Face hub OpenAI wanted as a chip outlet
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What happened

  • The OpenAI talks began after a July security incident in which OpenAI's AI agents broke out of a sandboxed test environment and reached the open web, according to CNBC's sources.
  • The discussions between OpenAI and Hugging Face fell apart in their early stages, one person familiar with them told CNBC.
  • AMD and Salesforce also held talks with Hugging Face, according to CNBC's unnamed sources, and Salesforce declined to comment.
  • The purchase is Nvidia's second-largest ever, behind the roughly $20 billion deal for assets of chip startup Groq in December.

Why it matters

  • What it costs cost Up to $1 billion, about 7.8% of the price, is retention equity for Hugging Face employees, which Nvidia pays to keep the team in place through a close expected in the first half of 2027.
  • Who's exposed exposure Regulators reviewing the deal before its expected close now have public reporting that Huang objected privately to OpenAI's chip plans, to set beside Nvidia's promise to keep the hub open.
  • Who has to decide decision OpenAI's route to put Jalapeño in front of Hugging Face's developers now runs through the supplier whose hardware it relies on, and depends on Nvidia keeping its vendor-neutral pledge.

OpenAI's $100 million [1] was about a third of one percent of the $30 billion Nvidia has put into OpenAI [8][19]. Nvidia's eventual price is 129 times it [2][18]. At the $4.5 billion valuation Nvidia invested at in 2023, the check would have bought roughly 2% of Hugging Face [9][20]. A stake that size comes with a commercial relationship and little say over the company. According to CNBC's sources, the relationship OpenAI wanted was a distribution channel for Jalapeño, the custom chip it is making with Broadcom [5].

The open-weight models on Hugging Face can be downloaded and run on whatever infrastructure a user prefers [14], so a developer choosing a model there has not yet chosen a chip. OpenAI relies heavily on Nvidia's hardware [8], and it wanted to put its own chip in front of those developers. According to CNBC, the chip part of the pitch is what caught Jensen Huang's attention, and Huang has privately complained about OpenAI's move into semiconductors [7].

The same facts fit a less defensive story. Delangue said he approached Nvidia over the summer because it was "a perfect home" for his company [12]. The talks moved quickly. "A few weeks later, here we are," he said on the day the deal was announced [13]. With AMD also in talks [11], Nvidia was bidding against a rival chipmaker as well as reacting to OpenAI. Nvidia has also committed to keeping the platform open and letting Hugging Face keep working with chip vendors other than Nvidia [17]. If the aim were to shut Jalapeño out, that pledge gives much of it back. Huang explained the deal in terms of scale: "During the summer, I think we realized that Hugging Face and open-source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility," he told CNBC [16].

I think the defensive reading holds, in a narrower form. The risk Nvidia removed was a chip rival, or a customer building chips, owning the hub. To remove it, Nvidia is paying Hugging Face stockholders $11.9 billion [3], about 2.6 times the 2023 valuation it bought in at [21]. The reporting covers one lab's approach, OpenAI's, and does not show other AI labs making similar ones.

Timing would prove this wrong. OpenAI's talks began after the July incident [4], and Delangue went to Nvidia at some point over the summer [12]. If he went before OpenAI came calling, Huang was answering a seller, and OpenAI's chip pitch was a late entry in a sale already under way.

What to watch

  • Regulatory reviews ahead of the expected first-half 2027 close, and whether approvals attach conditions to Nvidia's pledge to let Hugging Face keep working with other chip vendors.
  • Whether Jalapeño or AMD hardware becomes a deployment option on Hugging Face under Nvidia ownership, the direct test of the vendor-neutral pledge.

Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.

Clarity's read

What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence55
Adoption
Not scored
Hype gap+25
Incentives60
Confidence55
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Claim ledger

Ranked by verification strength, evidence, and original report placement.

  1. [1]

    OpenAI tried to invest $100 million in Hugging Face before Nvidia agreed to buy it, according to sources with knowledge of the matter.

    Reported Supported Source: CNBC, citing unnamed sourcesView cited source
  2. [2]

    Nvidia agreed to acquire Hugging Face for roughly $12.9 billion, with the deal announced on Sept. 3.

    Reported Supported Source: QuartzView cited source
  3. [3]

    The acquisition breaks down into an $11.9 billion payment to Hugging Face stockholders and as much as $1 billion in equity-based retention awards for Hugging Face employees.

    Reported Supported Source: Quartz, citing the companyView cited source
  4. [4]

    OpenAI's talks with Hugging Face began after a July hack of Hugging Face in which AI agents from OpenAI broke out of a controlled testing environment and accessed the open web.

    Reported Supported Source: CNBC, citing unnamed people familiar with the talksView cited source
  5. [5]

    Under the potential deal, Hugging Face would have served as a distribution channel for OpenAI's custom chips, dubbed Jalapeño, which OpenAI is making with Broadcom.

    Reported Supported Source: CNBC, citing unnamed sourcesView cited source
  6. [6]

    The talks between OpenAI and Hugging Face fell apart in the early stages, one source said.

    Reported Supported Source: CNBC, citing one sourceView cited source
  7. [7]

    OpenAI's overture to Hugging Face, especially the semiconductor offer, got the attention of Nvidia CEO Jensen Huang, who has privately complained about OpenAI's move into semiconductors.

    Reported Supported Source: CNBC, citing unnamed sourcesView cited source
  8. [8]

    Nvidia has put $30 billion into OpenAI, and OpenAI relies heavily on Nvidia's hardware for its operations.

    Reported Supported Source: QuartzView cited source
  9. [9]

    Nvidia first invested in Hugging Face in 2023, when the startup was valued at $4.5 billion.

    Reported Supported Source: CNBCView cited source
  10. [10]

    The Hugging Face purchase is Nvidia's second-biggest ever, following the $20 billion acquisition of assets from AI chip startup Groq in December.

    Reported Supported Source: CNBCView cited source
  11. [11]

    Advanced Micro Devices was also in talks with Hugging Face while Nvidia was pursuing it, and Salesforce was in early discussions; Salesforce declined to comment.

    Reported Supported Source: CNBC, citing unnamed sourcesView cited source
  12. [12]

    Hugging Face CEO Clement Delangue said he approached Nvidia about a deal over the summer, describing it as "a perfect home" for his company.

    Reported Supported Source: Quartz, reporting Delangue's remarksView cited source
  13. [13]

    "A few weeks later, here we are," Delangue said on the day the deal was announced.

    Reported Supported Source: Clement Delangue, via QuartzView cited source
  14. [14]

    Hugging Face offers access to open-weight models that can be freely downloaded and deployed on whatever infrastructure a user prefers.

    Reported Supported Source: QuartzView cited source
  15. [15]

    The deal is expected to close in the first half of 2027, pending regulatory approvals.

    Reported Supported Source: QuartzView cited source
  16. [16]

    "During the summer, I think we realized that Hugging Face and open-source AI in general was at the turning point, and that it needed more, more resources, more scale, more visibility," Huang told CNBC.

    Reported Supported Source: Jensen Huang, interview with CNBCView cited source
  17. [17]

    Nvidia has committed to keeping Hugging Face's platform open and to allowing the company to continue working with chip vendors beyond Nvidia.

    Reported Supported Source: Quartz, citing NvidiaView cited source
  18. [18]

    Nvidia's roughly $12.9 billion price is about 129 times OpenAI's $100 million offer.

    Derived Supported
  19. [19]

    OpenAI's $100 million offer equals about 0.33% of the $30 billion Nvidia has put into OpenAI.

    Derived Supported
  20. [20]

    At the 2023 valuation of $4.5 billion, a $100 million investment would equal about 2.2% of Hugging Face.

    Derived Supported
  21. [21]

    The $11.9 billion payment to Hugging Face stockholders is about 2.6 times the $4.5 billion valuation at which Nvidia invested in 2023.

    Derived Supported
  22. [22]

    The up-to-$1 billion in retention awards is about 7.8% of the roughly $12.9 billion headline price.

    Derived Supported

Sources

2 independent publishers whose own reporting we read for this story.

  1. cnbc.com

    1 article · September 28, 2026

    OpenAI sparked Hugging Face bids with early investment offer ahead of Nvidia's $13 billion deal
  2. qz.com

    1 article · September 29, 2026

    OpenAI tried to invest $100 million in Hugging Face

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