Nvidia Strikes $20B Groq Deal, Clarifies Structure
Key Points
- CNBC reports Nvidia is buying Groq’s AI chip assets for about $20 billion in cash
- Groq says it signed a non-exclusive tech licensing deal and will remain independent
- Groq’s CEO Jonathan Ross and senior leaders will join Nvidia under the agreement
- The transaction would be Nvidia’s largest deal to date if completed as reported
Conflicting descriptions of Nvidia–Groq transaction
Nvidia and AI chip startup Groq are at the center of a major deal reported at about $20 billion, but the structure of the transaction is being described differently by the parties involved and by media and investors. CNBC, citing Alex Davis, CEO of Groq backer Disruptive, reported that Nvidia has agreed to buy Groq or its assets for $20 billion in cash, in what would be Nvidia’s largest acquisition on record. Reuters similarly reported that Nvidia has agreed to buy Groq for $20 billion, citing the same source, and said the acquisition would include all of Groq’s assets except its early-stage Groq cloud business. Multiple outlets, including Yahoo Finance and Investing.com, echoed CNBC’s characterization of the deal as a full acquisition. In contrast, Groq said in a blog post that it has entered into a non-exclusive licensing agreement with Nvidia for Groq’s inference technology and stated that it will continue as an independent company. Nvidia, in comments to TechCrunch, also said the arrangement is not an acquisition of the company, while declining to detail the scope of the deal.
Licensing agreement, leadership moves and asset scope
According to Groq’s statement, the company has signed a non-exclusive licensing agreement under which Nvidia will license Groq’s inference technology. As part of that agreement, Groq founder and CEO Jonathan Ross, president Sunny Madra and other senior leaders will join Nvidia to help advance and scale the licensed technology. Groq said it will remain an independent company led by finance chief Simon Edwards as CEO, and that its GroqCloud service will continue to operate without interruption. Davis told CNBC that Nvidia is getting all of Groq’s assets, excluding the nascent Groq cloud business, and that Groq is expected to notify investors about the deal. Nvidia CEO Jensen Huang, in an email to employees obtained by CNBC, said the company plans to integrate Groq’s low-latency processors into the Nvidia AI factory architecture to serve a broader range of AI inference and real-time workloads. Huang added that Nvidia is adding talented employees and licensing Groq’s intellectual property, but is not acquiring Groq as a company.
Strategic significance and Groq’s rapid growth
If completed on the reported financial terms, the $20 billion transaction would be by far Nvidia’s largest deal, surpassing its roughly $6.9 billion acquisition of Mellanox Technologies in 2019. Nvidia had $60.6 billion in cash and short-term investments at the end of October, according to CNBC. The deal underscores Nvidia’s push to strengthen its position in advanced AI hardware as demand for computing power accelerates. Nvidia’s GPUs have become an industry standard for AI workloads, while Groq has developed a different type of chip, a language processing unit, which it has claimed can run large language models at up to 10 times the speed and with one-tenth the energy of alternatives. Groq specializes in AI inference chips designed to optimize pre-trained models and has experienced rapid growth. In September, the company raised $750 million at a $6.9 billion valuation, more than doubling its valuation from August of the prior year. Investors in that round included BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital. Groq has said it powers AI applications for more than 2 million developers, up from about 356,000 a year earlier. The reported Nvidia–Groq deal follows a similar pattern to a smaller transaction in September, when Nvidia spent over $900 million to hire Enfabrica’s CEO and other employees and to license that startup’s technology.
Key Takeaways
- Reports from investors and media frame the $20 billion Groq deal as an acquisition, while Nvidia and Groq describe it as a licensing and talent transaction.
- Groq’s leadership transition and continued operation of GroqCloud indicate that parts of the business will remain independent even as core technology and staff move to Nvidia.
- The scale of the deal and Groq’s specialized inference chips highlight Nvidia’s strategy of expanding beyond GPUs by integrating complementary AI accelerators and expertise.
References
- 1. https://www.cnbc.com/2025/12/24/nvidia-buying-ai-chip-startup-groq-for-about-20-billion-biggest-deal.html
- 2. https://finance.yahoo.com/news/nvidia-buy-ai-chip-startup-210634730.html
- 3. https://techcrunch.com/2025/12/24/nvidia-acquires-ai-chip-challenger-groq-for-20b-report-says/
- 4. https://finance.yahoo.com/news/nvidia-acquires-ai-chip-challenger-220316328.html
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