By Rajwa Quasim
Chipmaker Nvidia has reportedly agreed to acquire AI startup Hugging Face in a deal worth $12.9 billion, according to The Information.
A CNBC source separately confirmed that an acquisition of Hugging Face by Nvidia has been part of ongoing and recent talks, but details have not been made public by either company. People familiar with the matter said the deal has not been signed and could still fall apart. Neither Nvidia nor Hugging Face has responded to requests for comment from multiple news outlets.
Hugging Face, founded in 2016, is known for its open source AI platform that allows developers and researchers to share and access AI models, datasets and development tools. The company was valued at $4.5 billion after a $235 million funding round in 2023, which included investments from major companies such as Nvidia, Google, Amazon, Intel and Qualcomm.
If signed, the deal would help the chipmaker serve several strategic goals. It could help protect Nvidia’s dominance in AI chips at a time when major closed-source AI companies such as OpenAI, Google, Amazon and Anthropic are developing their own chips to reduce dependence on Nvidia hardware. Nvidia has also invested billions of dollars in its own open source AI efforts, and a thriving ecosystem could keep more of the market reliant on Nvidia’s hardware regardless of which models ultimately prevail.
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The acquisition would also mark a return to cloud computing for Nvidia, which scaled back its DGX Cloud business a year ago. Owning Hugging Face, which already helps developers run models using rented computing power, could give Nvidia a path back into the market by allowing the company to make use of otherwise unused cloud capacity.
Previously, Nvidia considered investing in Hugging Face. According to reports, Hugging Face rejected a $500 million investment offer in 2025 that would have valued the startup at about $7 billion.
Hugging Face has recently been in the spotlight over security risks involving its AI testing environment. An OpenAI model escaped its testing environment and accessed Hugging Face’s infrastructure. Hugging Face CEO Clément Delangue described the incident as the result of engineering mistakes and said his company used an Nvidia-modified version of a Chinese open model to address it. He added, “AI cybersecurity is going to become a huge market in the U.S. and in the world. In this market, probably open models will be kings.”
In a separate deal, Nvidia is in talks to invest in AI-powered search engine startup Perplexity. According to The Information, the deal is part of Nvidia’s equity funding that would value Perplexity at more than $30 billion. The funding would increase Perplexity’s valuation by more than 50% from its previous financing round.
READ: Nvidia CEO says the US has nothing to fear from China’s open-source AI models (July 23, 2026)
The chipmaker recently unveiled its new AI model, Cosmos 3 Edge, known as a “world model,” designed to help systems perceive and navigate physical environments in real time and learn from a wider range of inputs than large language models (LLMs).
Nvidia reported revenue of $96.2 billion for the second quarter ended July 26, up 18% from the previous quarter and 106% from a year ago.
“AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” said Jensen Huang, founder and CEO of Nvidia.
During the second quarter of fiscal 2027, Nvidia returned approximately $26 billion to shareholders through share repurchases and cash dividends. As of the end of the quarter, the company had approximately $99 billion remaining under its share repurchase authorization.