In US Stock Market News, NVIDIA announced on September 3 that it agreed to acquire Hugging Face in a deal valued at approximately $12.9 billion, expected to close in the first half of 2027. The deal includes an equity-based retention program of up to $1 billion for Hugging Face employees. This acquisition marks NVIDIA's largest purchase to date, nearly doubling the cost of its previous largest acquisition, Mellanox, which closed on April 27, 2020, at a transaction value of $7 billion. The Stock Market News Today highlights this strategic move as NVIDIA continues to expand its AI ecosystem reach.
NVIDIA's Previous Major Acquisition: Mellanox
NVIDIA agreed on March 11, 2019, to pay $125 per share in cash for Mellanox, valuing the data center networking specialist at 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, generating $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. CEO Jensen Huang stated at closing that "With Mellanox, the new NVIDIA has end-to-end technologies from AI computing to networking."
Data Center Networking Revenue Growth Following Mellanox Integration
Following the Mellanox acquisition, NVIDIA's data center networking revenue expanded significantly. 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 in January, showing growth that accelerated from 51% to 142%. 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. 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.
The Hugging Face Acquisition
The platform's scale helps explain NVIDIA's 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 counted NVIDIA among its investors and was valued at $4.5 billion in a funding round three years ago. According to The Information, annualized revenue had climbed 50% in two months in August to more than $150 million. NVIDIA expects the deal to close in the first half of 2027. The company says Hugging Face will stay an open platform for the whole AI ecosystem, with NVIDIA compute never required to build on it.
At around $12.9 billion total deal value, NVIDIA is paying approximately 86 times reported annualized revenue, compared to about five times sales for Mellanox. One 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.
Strategic Rationale and Comparison
The key belief behind the Hugging Face acquisition is that owning the platform where developers pick their models keeps them and their compute budgets on NVIDIA's hardware and software. Like the Mellanox deal, if a return comes, it comes through chip and system sales, not Hugging Face's revenue line. 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.
FAQ
What did NVIDIA announce on September 3 regarding Hugging Face?
NVIDIA announced on September 3 that it agreed to acquire Hugging Face in a deal valued at approximately $12.9 billion, including an equity-based retention program of up to $1 billion for Hugging Face employees, with the deal expected to close in the first half of 2027.
What is the main today stock market news comparing NVIDIA's two major acquisitions?
The Hugging Face acquisition at $12.9 billion costs nearly twice as much as NVIDIA's previous largest acquisition, Mellanox, which closed at a transaction value of $7 billion on April 27, 2020. However, the Mellanox business Nvidia bought for $7 billion generated $31.4 billion in data center networking revenue in fiscal 2026, more than four times the purchase price.
How many users does Hugging Face have and what content does it host?
More than 18 million developers, researchers, and creators use Hugging Face to share more than 3 million models and 500,000 datasets.
