Nvidia has agreed to pay $20 billion in cash for assets from AI chip startup Groq, according to Alex Davis, CEO of Disruptive, which led Groq's most recent funding round. The all-cash deal, announced on Christmas Eve, nearly triples Groq's $6.9 billion valuation from just three months ago.
Groq's founder and CEO Jonathan Ross, along with president Sunny Madra and other senior engineers, will join Nvidia. The startup's cloud business stays behind as an independent entity under new CEO Simon Edwards, formerly CFO. Groq itself calls this a "non-exclusive licensing agreement" rather than an acquisition, and Nvidia CEO Jensen Huang told employees in an internal memo that the company is "licensing Groq's IP" and "not acquiring Groq as a company." Whether the distinction matters much when $20 billion and most of the leadership change hands is another question.
Nvidia dominates AI training hardware but faces stiffer competition in inference, where models respond to user requests after training. Groq's Language Processing Units claim to run large language models ten times faster using one-tenth the energy of GPUs. The technology uses on-chip SRAM instead of external high-bandwidth memory, avoiding industry-wide memory constraints. Huang wrote that Nvidia plans to integrate "Groq's low-latency processors into the NVIDIA AI factory architecture."
This follows a similar playbook from September, when Nvidia paid over $900 million to hire Enfabrica's CEO and license that startup's technology. Nvidia's previous largest deal was the Mellanox acquisition, announced in March 2019 and closed in April 2020 for about $7 billion.
The Bottom Line: Nvidia just paid nearly three times Groq's last valuation to absorb the team behind Google's original TPU and their inference chip technology.
QUICK FACTS
- Deal value: $20 billion (all cash, per investor source)
- Groq's September valuation: $6.9 billion
- Nvidia's previous largest acquisition: Mellanox, ~$7 billion (2019/2020)
- Nvidia's cash position (end of October): $60.6 billion
- Groq's 2025 revenue target: $500 million (company-reported)
- Founded: 2016 by former Google TPU engineers
