Nvidia founder and CEO Jensen Huang seems to be on as US President Donald Trump speaks on the US-Saudi Funding Discussion board on the John F. Kennedy Middle for the Performing Arts in Washington, DC on Nov. 19, 2025.
Brendan Smialowski | AFP | Getty Photographs
It has been two days since information broke that Nvidia was spending $20 billion to amass prime expertise from Groq in what the chip startup known as a “non-exclusive licensing settlement.”
Nvidia, the world’s most useful firm, hasn’t issued a press launch or regulatory submitting and, in line with a spokesperson, is simply confirming the contents of Groq’s 90-word weblog put up revealed after the shut of holiday-shortened buying and selling on Wednesday.
“They’re so large now that they’ll do a $20 billion deal on Christmas Eve with no press launch and no person bats a watch,” stated Stacy Rasgon, an analyst at Bernstein, in a Friday interview with CNBC’s “Squawk on the Avenue.”
Whereas neither firm confirmed the value tag, CNBC realized from Groq lead investor Alex Davis on Wednesday that Nvidia had agreed to purchase property from Groq, a designer of high-performance synthetic intelligence accelerator chips, for $20 billion in money. Davis’ agency, Disruptive, has invested greater than half a billion {dollars} in Groq and led the startup’s newest financing spherical in September at a $6.9 billion valuation.
Groq founder and CEO Jonathan Ross together with Sunny Madra, the corporate’s president, and different senior leaders “will be a part of Nvidia to assist advance and scale the licensed expertise,” the startup stated within the put up, including that it’ll proceed as an “unbiased firm,” led by finance chief Simon Edwards.
As an acquisition, Groq would mark by far Nvidia’s largest in its 32-year historical past. Its greatest prior buy occurred in 2019, when Nvidia purchased Israeli chip designer Mellanox for near $7 billion.
However Nvidia is as an alternative following a playbook utilized by different tech giants over the past couple years, spending billions of {dollars} to rent prime expertise in AI and to get entry to key expertise by means of licensing agreements.
It is a technique that is been employed by Meta, Google, Microsoft and Amazon. Nvidia itself beforehand used the tactic, shelling out greater than $900 million in September to rent Enfabrica CEO Rochan Sankar and different staff on the AI {hardware} startup, and to license the corporate’s expertise, CNBC reported on the time.
By avoiding conventional acquisitions, tech firms have been in a position to skirt some degree of antitrust scrutiny and shortly shut offers to herald the individuals they most covet.
“Antitrust would appear to be the first danger right here, although structuring the deal as a non-exclusive license might preserve the fiction of competitors alive,” Rasgon wrote in a be aware to shoppers on Thursday. His agency recommends shopping for Nvidia shares and has a $275 worth goal on the inventory.
Shares of Nvidia rose about 1% on Friday to $190.53. The inventory has gained 42% this yr and is up thirteenfold because the finish of 2022, when generative AI began taking off following the launch of OpenAI’s ChatGPT.
Nvidia has been utilizing its increasing money pile to unfold capital throughout the AI ecosystem, together with by means of current investments in OpenAI and Intel. On the finish of October, Nvidia had $60.6 billion in money and short-term investments, up from $13.3 billion in early 2023.
Widening the ‘aggressive moat’
Groq’s specialty is on the inference facet of the market, which refers back to the the usage of AI to make choices based mostly on new info. Nvidia dominates the coaching piece of the market, which entails educating AI fashions to be taught from patterns in massive quantities of knowledge.
Analysts at Cantor stated in a report Friday that Nvidia is “taking part in each offense and protection” by snapping up Groq’s property, holding them from probably touchdown within the arms of a competitor.
“We expect this acquisition solely enhances Nvidia’s full system stack and general management within the AI market (and solely widens its aggressive moat),” wrote the analysts, who saved their purchase ranking and $300 worth goal.
BofA Securities analysts additionally maintained their purchase suggestion and $275 goal following the announcement. In a be aware Friday, they characterised the deal as “stunning, costly however strategic,” and stated it exhibits Nvidia acknowledges that “whereas GPU dominated AI coaching, the fast shift in the direction of inference may require extra specialised chips.”
The analysts stated that key questions stay, reminiscent of who will personal Groq’s language processing unit mental property, whether or not it may be licensed to Nvidia opponents and whether or not what’s left of Groq — its nascent cloud enterprise — may presumably “undercut NVDA’s LPU-based service with decrease pricing.”
Nvidia is not commenting on any of these particulars for now. The primary alternative analysts and traders will probably get to listen to from the corporate can be Jan. 5, when CEO Jensen Huang is scheduled to converse at CES in Las Vegas.
— CNBCs David Faber contributed to this report
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