Nvidia ( NVDA +0.84% ) announced on September 3 that it has agreed to acquire Hugging Face, which runs one of the most widely used platforms for sharing artificial intelligence (AI) models. The total deal value is about $12.9 billion.
Nvidia expects the deal to close in the first half of 2027. And the company says Hugging Face will stay an open platform for the whole AI ecosystem, with Nvidia compute never required to build on it.
That price invites a comparison. The largest acquisition Nvidia has ever closed is Mellanox, the data center networking specialist it agreed to buy for about $6.9 billion in 2019. Hugging Face will cost nearly twice as much.
What $6.9 billion bought
Nvidia agreed on March 11, 2019, to pay $125 per share in cash for Mellanox, about $6.9 billion in enterprise value. The deal closed more than a year later, on April 27, 2020, at a transaction value of $7 billion.
Mellanox was a substantial business. In 2019, its last full year as a stand-alone company, it generated $1.33 billion in revenue, up 22% year over year, and $205 million in net income, up 53%. The price came to about five times Mellanox's 2019 sales, and about 34 times its earnings .
"With Mellanox, the new NVIDIA has end-to-end technologies from AI computing to networking," CEO Jensen Huang said when the deal closed.
Networking became a $31 billion business
Nvidia doesn't report Mellanox's results separately. But its annual filings disclose data center networking revenue , the line where the acquisition landed. Networking revenue was $8.6 billion in fiscal 2024, $13 billion in fiscal 2025, and $31.4 billion in fiscal 2026, the year that ended this past January -- growth that accelerated from 51% to 142%.
That line isn't all Mellanox, though. Nvidia says fiscal 2026's networking growth was driven by the ramp of NVLink, an interconnect Nvidia announced back in 2014, along with the Ethernet and InfiniBand platforms that came with the deal.
And the disclosure has since gone quiet. Nvidia's commentary on its fiscal second quarter of 2027 (the period ended July 26, 2026) splits data center revenue by customer type and doesn't break out networking at all.
Even so, the business Nvidia bought for $7 billion anchors a product line that generated $31.4 billion in revenue in a single fiscal year -- more than four times the purchase price. However the credit gets divided, I think few big acquisitions anywhere have turned out better.
What does $12.9 billion buy?
Nvidia's announcement puts the total deal value at $12.9 billion, including an equity-based retention program of up to $1 billion for Hugging Face employees who join the company. The platform's scale helps explain the interest. More than 18 million developers, researchers, and creators use Hugging Face to share more than 3 million models and 500,000 datasets.
Hugging Face, founded in 2016, already counts Nvidia among its investors and was valued at $4.5 billion in a funding round three years ago. As for what the company brings in today: The Information reported in August that annualized revenue had climbed 50% in two months, to more than $150 million.
Set that figure against the total deal value, and Nvidia is paying around 86 times reported annualized revenue. It paid about five times sales for Mellanox.
What Nvidia has to believe, I'd argue, is that Hugging Face can pay off the way Mellanox did -- indirectly. The Mellanox deal worked because networking became an integral part of the AI data center systems Nvidia sells, not because Mellanox kept growing as a business apart.
The equivalent belief is that owning the platform where developers pick their models keeps them, and their compute budgets, on Nvidia's hardware and software. If a return comes, it comes through chip and system sales, not Hugging Face's revenue line.
One more difference favors the deal. Nvidia had about $11.7 billion in annual revenue when it announced the Mellanox acquisition, so that price equaled nearly 60% of a year's sales. The $12.9 billion for Hugging Face is small for today's Nvidia, which generated $96.2 billion in revenue and nearly $60 billion in net income in the fiscal second quarter alone. (Nvidia's December 2025 Groq deal was bigger, reportedly valued at about $20 billion, but that was a technology license and hiring, not a purchase of the company.)
Ultimately, the Mellanox price ended up looking like a bargain. But the payoff ran through Nvidia's own product line, and at around 86 times revenue, Hugging Face will need the same indirect kind of payoff.
I wouldn't buy or sell the stock over this deal. With shares around $230 as of this writing, a check this size likely won't decide where the stock goes. And I think management has earned some patience on deals like this one.