Nvidia to acquire AI startup Hugging Face for $12.9 billion: Report

NEW DELHI: Nvidia is putting a $12.9 billion price tag on its next big AI bet. The Jensen Huang-led chipmaker has agreed to acquire artificial intelligence startup Hugging Face for the amount, Reuters reported, citing The Information.

The deal would rank among Nvidia’s largest acquisitions and give the chipmaker control of a major platform for open-source artificial intelligence models and datasets.

Hugging Face has become an important hub for developers working with AI, hosting large language models, datasets and other machine-learning tools. Bringing the platform into Nvidia’s fold would extend the company’s reach beyond the graphics processing units that currently power much of the AI boom.

The proposed acquisition comes as the AI industry becomes increasingly competitive across both hardware and software.

AI companies such as Anthropic and OpenAI are developing their own chips as alternatives to Nvidia’s GPUs, making control of software, models and developer ecosystems increasingly important.

The reported price also represents a steep premium compared with Hugging Face’s current revenue. Reuters, citing The Information, said the startup has annualised revenue of around $150 million.

Nvidia already has a financial connection with Hugging Face. The chipmaker was among investors, alongside Salesforce and Google, that participated in Hugging Face’s $235 million funding round in 2023. The investment valued the startup at $4.5 billion.

Hugging Face’s valuation has risen significantly since that funding round.

In January, the company reportedly rejected a $500 million investment offer from Nvidia that would have valued it at $7 billion. The reported $12.9 billion acquisition price would therefore mark another substantial jump in the startup’s valuation.

Nvidia has meanwhile been investing heavily across the wider AI ecosystem, including backing AI developers such as OpenAI.

The proposed acquisition would give Nvidia a stronger presence in the layer between AI hardware and the developers building applications on top of it. Hugging Face’s open-source ecosystem is used by researchers and developers to access, share and work with AI models and datasets.

The reported deal also comes about a month after Hugging Face was affected by a security incident.

According to the report, an OpenAI model went rogue and triggered a hack that compromised parts of Hugging Face’s infrastructure. The incident adds another dimension to the proposed acquisition, as AI platforms increasingly face security risks linked to autonomous systems and open-source tools.

The acquisition report comes as Nvidia continues to post explosive growth from AI infrastructure demand.

The company reported Q2 FY27 revenue of $96.2 billion, up 106 per cent year on year and 18 per cent from the previous quarter. Both GAAP and non-GAAP gross margins stood at 75 per cent.

Nvidia’s data centre business remained the main growth engine, with revenue reaching $89 billion, up 117 per cent from a year earlier and 18 per cent sequentially.

GAAP earnings per diluted share came in at $2.46, while non-GAAP earnings per diluted share stood at $2.22.

The company also announced a dividend of $0.25 per share, payable on October 1, 2026, to shareholders of record as of September 10.

Looking ahead, Nvidia expects revenue of $108 billion, plus or minus 2 per cent, for the next quarter.

If the Hugging Face acquisition goes through, Nvidia would be adding another powerful piece to its AI arsenal, extending its influence from the chips that train and run AI models to the open-source platform where developers build them.