Nvidia Strikes $20 Billion Deal for Groq Assets, Deepening Its Grip on the AI Chip Race
Nvidia Strikes $20 Billion Deal : Nvidia has agreed to acquire key assets from Groq, a fast-growing designer of high-performance artificial intelligence accelerator chips, in an all-cash deal valued at $20 billion, according to Alex Davis, CEO of Disruptive, an investor that led Groq’s most recent funding round.
The agreement, which came together rapidly, represents Nvidia’s largest transaction ever, far surpassing its $7 billion acquisition of Mellanox in 2019. Groq had raised $750 million just three months ago at a valuation of approximately $6.9 billion, with backing from major investors including BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital.
In a blog post, Groq confirmed it has entered into a non-exclusive licensing agreement with Nvidia for its inference technology. As part of the deal, Groq founder and CEO Jonathan Ross, President Sunny Madra, and several senior leaders will join Nvidia to help scale the licensed technology. However, Groq will continue to operate as an independent company, now led by finance chief Simon Edwards as CEO.
Nvidia CEO Jensen Huang, in an internal email obtained by CNBC, said the agreement will strengthen Nvidia’s AI platform. “We plan to integrate Groq’s low-latency processors into the NVIDIA AI factory architecture, expanding our ability to serve real-time and inference-heavy workloads,” Huang wrote. He clarified that Nvidia is licensing Groq’s IP and talent, not acquiring the company itself.
GroqCloud, the startup’s cloud computing business, is not part of the transaction and will continue operating independently.
The deal underscores Nvidia’s aggressive push to dominate the AI hardware ecosystem as demand for inference-focused chips surges. Groq had been targeting $500 million in revenue this year, fueled by booming interest in large language model inference.
Founded in 2016 by former Google engineers, including Ross—one of the creators of Google’s Tensor Processing Unit (TPU)—Groq has emerged as a notable challenger in the AI chip space. Its momentum reflects a broader trend, as Nvidia and other tech giants increasingly use licensing deals and talent acquisitions to secure an edge in the global AI arms race.
With over $60 billion in cash and short-term investments, Nvidia continues to leverage its financial strength to invest heavily across AI chips, cloud infrastructure, and next-generation computing—cementing its position at the center of the AI boom.
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