 "Inside Nvidia's biggest deal: The $20 billion Groq AI asset acquisition")
Nvidia has agreed to buy key assets from Groq, a startup that designs high-performance artificial intelligence accelerator chips, in a cash deal worth $20 billion, CNBC reported.
Alex Davis, chief executive officer of Disruptive, which led Groq’s most recent funding round in September, said the agreement was reached quickly even though Groq was not actively looking to sell. Disruptive has invested more than $500 million in Groq since the company was founded in 2016.
Three months ago, Groq raised $750 million at a valuation of about $6.9 billion. The funding round drew investors including BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital. Donald Trump Jr. is a partner at 1789 Capital.
What is the licensing deal with Nvidia?
Groq confirmed the agreement in a blog post on Wednesday, saying it has “entered into a non-exclusive licensing agreement with Nvidia for Groq’s inference technology”.
As part of the deal, Groq founder and chief executive Jonathan Ross, company president Sunny Madra and other senior leaders “will join Nvidia to help advance and scale the licensed technology”, the company said.
Groq added that it will continue to operate as an independent company, with finance chief Simon Edwards taking over as chief executive.
What assets is Nvidia acquiring from Groq?
Davis told CNBC that Nvidia is acquiring all of Groq’s assets except its cloud business. Groq confirmed that “GroqCloud will continue to operate without interruption”.
The transaction marks Nvidia’s largest deal to date. Its previous biggest acquisition was in 2019, when it bought Israeli chipmaker Mellanox for nearly $7 billion.
Nvidia’s balance sheet has strengthened sharply in recent years. The company had $60.6 billion in cash and short-term investments at the end of October, up from $13.3 billion in early 2023, according to CNBC.
What did Jensen Huang say about the deal?
In an internal email obtained by CNBC, Nvidia chief executive Jensen Huang said the deal would strengthen the company’s AI offerings.
“We plan to integrate Groq’s low-latency processors into the NVIDIA AI factory architecture, extending the platform to serve an even broader range of AI inference and real-time workloads,” Huang wrote.
He added, “While we are adding talented employees to our ranks and licensing Groq’s IP, we are not acquiring Groq as a company.”
What is Groq’s background and growth story?
Groq was founded in 2016 by former engineers, including Ross, who helped build Google’s tensor processing unit. The company has been targeting $500 million in revenue this year, driven by strong demand for AI inference chips.
How does this fit into Nvidia’s broader AI strategy?
The Groq deal is not Nvidia’s first move of this kind. In September, the company spent more than $900 million to hire staff and license technology from AI hardware startup Enfabrica.
Other technology giants such as Meta, Google and Microsoft have also relied on licensing arrangements and talent acquisitions to bolster their AI capabilities.
Nvidia has expanded investments across the AI ecosystem, backing firms such as Crusoe and Cohere and increasing its stake in CoreWeave. In September, Nvidia said it planned to invest up to $100 billion in OpenAI and $5 billion in Intel, though formal agreements are still pending.