Jonathan Ross, CEO of Groq Inc., during the GenAI Summit on Thursday, May 30, 2024 in San Francisco, California, USA.
David Paul | Bloomberg | Getty Images
Nvidia Disruptive CEO Alex Davis, who led the company’s latest funding round in September, said the company has agreed to acquire Groq, a designer of high-performance artificial intelligence accelerator chips, for $20 billion in cash.
Davis, whose company has invested more than $500 million in Groq since its founding in 2016, said the deal came together quickly. Groq raised $750 million three months ago at a valuation of about $6.9 billion. Investors in the round included BlackRock and Neuberger Berman, as well as Samsung, Cisco, Altimeter, and 1789 Capital, whose partner is Donald Trump Jr.
Groq is expected to alert investors about the deal later on Wednesday. The acquisition includes all of Groq’s assets, but the initial Groq cloud business is not part of the deal, Davis said.
This is Nvidia’s biggest deal to date. The chipmaker’s biggest acquisition to date was its acquisition of Israeli chip designer Mellanox in 2019 for nearly $7 billion. As of the end of October, Nvidia had $60.6 billion in cash and short-term investments, up from $13.3 billion at the beginning of 2023.
Groq is targeting $500 million in revenue this year as demand for its AI accelerator chips, used to speed up the process by which large language models complete inference-related tasks, soars. The company was not pursuing a sale when approached by Nvidia.
Nvidia CFO Colette Kress declined to comment on the deal.
Groq was founded in 2016 by a group of former engineers, including the company’s CEO Jonathan Ross. Ross is Google Tensor Processing Units (TPUs) are the company’s custom chips used by some companies as a replacement for Nvidia’s graphics processing units.
In its initial filing with the SEC announcing the $10.3 million funding in late 2016, the company named Ross and Douglas Wightman, an entrepreneur and former Google X “moonshot factory” engineer, as principals.
Nvidia is ramping up investments in chip startups and the broader ecosystem as its cash pile grows. The company is backing and increasing investments in AI and energy infrastructure company Crusoe and AI model developer Cohere. coreweave The AI-focused cloud provider was preparing to go public this year.
Nvidia announced in September that it intends to invest up to $100 billion in OpenAI, and that the startup is committed to deploying at least 10 gigawatts of Nvidia products. The two companies have not yet announced a formal agreement. That same month, NVIDIA announced it would invest $5 billion. intel As part of a partnership.
Another chip startup that’s gaining attention amid the AI boom is Cerebras Systems. The company had planned to go public this year, but withdrew its IPO application in October after announcing it had raised more than $1 billion in a funding round.
In an SEC filing, Cerebras said it does not intend to pursue the proposed offering “at this time,” but did not say why. At the time, a spokesperson told CNBC that the company wanted to go public as soon as possible.
—CNBC’s Jordan Novet contributed to this report.
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