Nvidia's $12.9bn Hugging Face swoop is really about filling the cloud capacity it has underwritten

Nvidia Corp ( NASDAQ:NVDA XETRA:NVD ) View Price & Profile Nvidia's $12.9bn Hugging Face swoop is really about filling the cloud capacity it has underwritten Published: 15:12 28 Aug 2026 BST The price Nvidia Corp (NASDAQ:NVDA, XETRA:NVD) is reported to be paying is the first thing analysts have flagged, and on the face of it $12.9 billion for Hugging Face looks rich. The terms value the open-source AI model repository at roughly 80 times its annualised revenue of about $150 million, a multiple that would raise eyebrows in almost any other setting. Yet Wedbush, the US investment bank, makes the counter-argument: for a company of Nvidia's size, a deal this small barely registers. The more interesting question is why the world's dominant supplier of AI chips wants a software business at all. The answer, in Wedbush's reading, lies in Nvidia's revived ambitions in the cloud, the business of renting out computing power, after it scaled back its earlier DGX Cloud venture. That marks a strategic gamble, because moving into cloud services puts Nvidia into competition with the very customers, the big cloud providers, that buy its chips in vast quantities. Casting itself as both supplier and rival to the same firms is not a step Nvidia would take lightly. The logic becomes clearer against Nvidia's mounting off-balance-sheet commitments. The company has pledged $36 billion to cloud contracts underpinned by credit-support arrangements, effectively backstopping demand for computing capacity that others are meant to buy. Owning Hugging Face would hand Nvidia a ready use for that capacity, a captive source of demand should the cloud operators it is supporting fail to find buyers of their own. The revenue growth helps the case, with Hugging Face's sales climbing from around $100 million only months earlier as appetite for open m...