NVIDIA has decided to hire Groq’s CEO, an Alphabet veteran, and license the company’s chip technology. Google and Groq stated on Wednesday in a blog post.
The transaction follows a well-known trend in recent years: the largest software companies in the world pay substantial sums to promising startups in exchange for their talent and technology, but they do not formally acquire the target.
Groq focuses on inference, which is the process by which pre-trained artificial intelligence models react to user requests.
Although Nvidia dominates the market for AI model training, it faces significantly greater competition in inference, where startups like Groq and Cerebras Systems, as well as more established competitors like Advanced Micro Devices, have attempted to challenge it.
According to Groq, Nvidia has consented to a “non-exclusive” license for its technology.
It announced that Groq President Sunny Madra and other members of its engineering team, along with its founder, Jonathan Ross, who assisted Google in launching its AI chip program, would join Nvidia.
Groq withheld the deal’s financial specifics.
Neither Nvidia nor Groq responded to CNBC’s claim that Nvidia has agreed to buy Groq for $20 billion in cash.
In its blog post, Groq stated that its cloud business will continue to operate and that it will remain an independent firm with Simon Edwards as CEO.
In comparable recent transactions, Meta paid $15 billion to recruit the CEO of Scale AI without purchasing the entire company, and Microsoft’s senior AI executive signed a $650 million contract with a startup that was characterized as a licensing fee.
Adept AI founders were hired away by Amazon, and Nvidia made a similar move last year.
Regulators have examined the transactions, but none have been unwound as of yet.
In a note to clients on Wednesday following Groq’s announcement, Bernstein analyst Stacy Rasgon wrote,
“Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive (even as Groq’s leadership and, we would presume, technical talent move over to Nvidia).”
Jensen Huang, the CEO of Nvidia, has a “relationship with the Trump administration that appears among the strongest of the key US tech companies.”
After a $750 million investment round in September, Groq’s valuation more than doubled to $6.9 billion from $2.8 billion in August of the previous year.
Groq is one of several upstarts that avoid the memory crunch plaguing the global semiconductor business by not using external high-bandwidth memory chips.
The method accelerates interactions with chatbots and other AI models by utilizing SRAM, a type of on-chip memory; however, it also limits the size of the model that can be served.
Cerebras Systems, which intends to go public as early as next year, is Groq’s main competitor in this strategy. In the Middle East, Groq and Cerebras have signed significant agreements.
In his largest keynote address of 2025, Huang of Nvidia primarily argued that Nvidia will be able to maintain its dominance as AI businesses transition from training to inference.
