Nvidia is also reportedly considering an investment in Thinking Machines Lab, adding to its growing portfolio of AI companies.
- Nvidia is paying approximately $11.9 billion for Hugging Face, with an additional retention program worth up to $1 billion for employees joining Nvidia.
- Needham said Nvidia is gaining access to a critical part of the AI development process where developers discover, download and deploy models.
- Raymond James compared Hugging Face to a combination of GitHub, an app store and a model registry, highlighting its role in the AI ecosystem.
Nvidia (NVDA) shares were on track to reach a two-month high in early trading Friday after analysts backed the chipmaker’s $12.93 billion acquisition of AI platform Hugging Face, saying the deal gives Nvidia greater access to the software and developer ecosystem around AI models.
In a note to investors cited by StreetInsider, Needham analyst Rajvindra Gill maintained a ‘Buy’ rating and $300 price target on Nvidia, stating the company is paying for access to a key part of the AI development process rather than simply acquiring Hugging Face’s existing earnings.
Raymond James also viewed the deal positively, maintaining a ‘Strong Buy’ rating. The firm said while the acquisition was "largely immaterial" for Nvidia’s balance sheet, it was a "strategically valuable move.” It added that the deal was "less about buying revenue and more about controlling a critical entry point in the AI model ecosystem and development process."
NVDA stock gained as much as 1.5% in pre-market trade. On Stocktwits, retail sentiment around the AI bellwether fell to ‘bearish’ from ‘neutral’ territory over the past day.
Nvidia Expands Beyond AI Chips
Raymond James described Hugging Face as combining elements of “GitHub + an app store + a model registry,” noting its role in distributing and managing AI models.
Gill said the deal gives Nvidia control of “a critical entry point in the AI model ecosystem and development process.” Hugging Face is where developers discover, download, evaluate and deploy AI models, giving Nvidia a direct connection to developers building AI applications.
Nvidia agreed to pay about $11.9 billion to Hugging Face shareholders, with another $1 billion in stock-based incentives intended to retain employees. The total value of the transaction is about $12.93 billion.
Nvidia said Hugging Face will remain an open platform following the acquisition. The company supports multiple hardware and cloud providers, meaning developers are not required to use Nvidia hardware. Maintaining that neutrality will be important to preserving the platform’s appeal.
Why Hugging Face Matters
The move comes after Huang said during the company’s second-quarter (Q2) earnings call that he “regrets” not having investing in Anthropic and OpenAI, calling it them a “once in a generation opportunity.”
Nvidia has been expanding its partnerships across the AI ecosystem. In January, it participated as a strategic investor in xAI’s $20 billion Series E round, and in August it unveiled financing platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize more than $500 billion for AI data‑center buildouts.
According to a report by The Information, Nvidia is in talks to invest about $2.5 billion in Thinking Machines Lab, the AI startup founded by former OpenAI CTO Mira Murati, which is seeking to raise roughly $1 billion at a pre‑money valuation near $40 billion.
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