Nvidia antitrust: DOJ questions $12.93B Hugging Face deal amid a wider AI review

The Justice Department is questioning Nvidia's planned $12.93 billion acquisition of Hugging Face, folding it into a broader, multi-year antitrust investigation of the chipmaker's business practices rather than treating it as a one-off merger review, according to reporting first carried by Reuters on Oct. 28 and picked up again in Tuesday's news cycle. The inquiry sits squarely on the point investors have been debating all year: how much vertical integration Nvidia can bolt onto its control of high-end compute before regulators step in.

The transaction itself is well past the announcement stage. Nvidia said on Sept. 3 it would buy Hugging Face, the dominant open-source model repository, and the structure became definitive days later: roughly $11.9 billion in cash plus an equity-retention pool for staff, a price tag that makes this the largest software deal in the current AI wave. Nvidia has said it expects to close in the first half of 2027, a timeline that keeps regulatory completion at the center of the bull case.

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What concerns the department, according to the two people familiar with the matter cited by Reuters, is that absorbing Hugging Face could hand Nvidia control of a crucial distribution channel for AI models and software. Hugging Face is how a large part of the open-weight community discovers, shares and runs models. The Hub now counts more than 18 million developers, roughly 3 million models and about 200,000 companies, figures published around the deal announcement in early September. Own that channel, the theory runs, and you own the doorway through which much of open-model AI flows, even before considering that Nvidia also sells the processors those models run on.

The investigation is broader than the deal. Beyond the pending acquisition, federal investigators are looking at Nvidia's sales tactics, its strategic investments and its earlier acquisitions, including workload-orchestration developer Run:ai and supercomputing software firm SchedMD, plus a 2025 licensing and talent arrangement with chip startup Groq. A recurring thread is whether Nvidia has used its dominant position in graphics processing units to press buyers into adjacent products, with one area of focus being whether preferential chip allocations have been tied to purchases of its networking equipment and Groq processors.

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For the AI buildout, the timing matters as much as the substance. This is the same week the market has been repricing how long hyperscaler capital spending can keep rising, and Nvidia is the load-bearing name in that trade. The stock closed the week at $204.64, down roughly 5% from the Oct. 26 level, and the 1.7% drop on the day the inquiry became public was a caution flag for a name whose valuation assumes the data-center story proceeds without a regulatory hitch. A conduct investigation is not a lawsuit and an inquiry does not inevitably produce enforcement, but it introduces scheduling risk into a deal whose closing date is already two calendar quarters away.

The institutional picture cuts both ways, so it is worth holding the two cases in view. On one side, a staff-led conduct review that began under the previous administration and has carried into the current one, with no public sign the White House has intervened, suggests the probe is running on its own institutional logic rather than a single political push. On the other, the department publicly emphasizes that it prioritizes domestic superintelligence capabilities when it looks at the AI economy, which is a softer posture for a company the administration has praised for national leadership. Either reading leaves the same open question for an investor: how far does the margin of safety extend for a company deploying enormous cash reserves into vertical acquisitions?

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The next catalysts are dated. Nvidia targets a first-half 2027 close, which forces the US and EU merger reviews onto that calendar. Any formal step by the DOJ, whether a second request, a remedies negotiation or a decision to stand down, would move the stock. The broader conduct inquiry has no fixed clock, which is exactly why it is the kind of overhang investors price only slowly. What to watch next is whether the deal-specific questions stay confined to the merger process or bleed into the wider conduct theory, because the first scenario is manageable for Nvidia and the second is a materially different risk profile for a company whose acquisition playbook has been built around precisely these vertical moves.

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