NVIDIA founder and CEO Jensen Huang looks on as U.S. President Donald Trump speaks at the U.S.-Saudi Investment Forum at the John F. Kennedy Performing Arts Center in Washington, DC, on November 19, 2025.
Brendan Smialowski AFP | Getty Images
Two days have passed since the news broke. Nvidia had spent $20 billion to acquire top talent from Groq in what the chip startup called a “non-exclusive license agreement.”
Nvidia, the world’s most valuable company, has not issued any press releases or regulatory filings, and a spokesperson said it was only confirming the contents of Groq’s 90-word blog post published after the close of holiday-shortened trading on Wednesday.
“They’re so big now that they can do a $20 billion deal on Christmas Eve with no press release and no one looking,” Bernstein analyst Stacy Rasgon said in an interview Friday on CNBC’s “Squawk on the Street.”
Although neither company has confirmed the price, CNBC learned Wednesday from Groq’s lead investor Alex Davis that NVIDIA has agreed to buy assets from Groq, a designer of high-performance artificial intelligence accelerator chips, for $20 billion in cash. Davis’ company Disruptive invested more than $500 million in Groq and led the startup’s latest funding round in September at a valuation of $6.9 billion.
Groq founder and CEO Jonathan Ross, company president Sunny Madra, and other senior executives will “join NVIDIA to support the advancement and expansion of our licensed technology,” the startup said in a post, adding that it will continue as an “independent company” led by finance chief Simon Edwards.
The acquisition of Groq is the largest acquisition in Nvidia’s 32-year history. Its biggest acquisition to date came in 2019, when Nvidia acquired Israeli chip design company Mellanox for nearly $7 billion.
But NVIDIA is instead following a strategy used by other tech giants over the past two years, spending billions of dollars to hire top talent in the AI field and gain access to key technologies through licensing deals.
That is the strategy adopted meta, google, microsoft and Amazon. Nvidia itself has used this tactic before, in September hiring Enfabrica CEO Rochan Sankar and other employees to the AI hardware startup and spending more than $900 million to license its technology, CNBC reported at the time.
By avoiding traditional acquisitions, tech companies have been able to avoid some antitrust scrutiny and quickly close deals to bring in the most coveted talent.
“While the primary risk here appears to be antitrust, structuring the transaction as a non-exclusive license may perpetuate the fiction of competition,” Rasgon wrote in a note to clients on Thursday. His firm recommends buying Nvidia stock and has a price target of $275.
Nvidia stock rose about 2% on Friday to $192.40. The company’s stock is up 43% this year, 13 times higher than it was at the end of 2022, when generative AI started to take off following OpenAI’s ChatGPT announcement.
Nvidia supports OpenAI and intel. 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.
Expansion of “competitive outer moat”
Groq was founded in 2016 by a group of former engineers, including Ross. He is one of the creators of Google’s Tensor Processing Unit (TPU). The TPU is the search giant’s custom chip used by some companies as a replacement for Nvidia’s graphics processing units (GPUs).
The startup specializes in the inference side of the market, which refers to using AI to make decisions based on new information. Nvidia dominates the market in training, which involves teaching AI models to learn from patterns in large amounts of data.
Kantar analysts said in a report Friday that Nvidia is “playing both offense and defense” by acquiring Groq’s assets and preventing them from potentially falling into the hands of competitors.
“We believe this acquisition only strengthens NVIDIA’s complete system stack and overall leadership in the AI market (and widens the competitive moat),” the analysts said, maintaining a buy rating and $300 price target.
Analysts at BofA Securities also maintained a buy recommendation and $275 target after the announcement. In a note Friday, the companies characterized the deal as “remarkable, expensive but strategic,” saying it shows NVIDIA recognizes that “while GPUs dominate AI training, a rapid transition to inference may require more specialized chips.”
Analysts said key questions remain, including who owns the intellectual property for Groq’s language processing unit, whether it can be licensed to Nvidia’s competitors, and whether what remains of Groq (an early-stage cloud business) could “undermine NVDA’s LPU-based services at lower prices.”
Nvidia has not commented on these details at this time. The first opportunity for analysts and investors to hear from the company will likely be on January 5, when CEO Jensen Huang is scheduled to speak at CES in Las Vegas.
— CNBC’s David Faber contributed to this report
See: Nvidia GPU to Google TPU — Analyzing every AI chip
