By Mike Leonard
Publication Date: 2026-10-05 16:20:00
Nvidia Corp.’s $20 billion deal with Groq Inc. is facing a legal challenge from investors who say Groq’s senior leaders were driven by lucrative side agreements to help the AI giant eliminate an existential threat.
Two former Groq shareholders are targeting the transaction in Delaware’s Chancery Court, where their lawsuit against Groq’s former board and CEO was unsealed Monday. The unusual “reverse acqui-hire,” which involved buying most of Groq’s assets and hiring most of its staff, offered a financial windfall to the corporate directors who signed off on it, according to the legal filing.
The deal last December, which has drawn antitrust and congressional scrutiny, is one of several recent corporate acquisitions aimed at growing and shoring up Nvidia’s dominant global position in the exploding trillion-dollar market for AI chips and related technology. The transactions also include its $13 billion deal for AI startup Hugging Face, which was announced last month.
The Groq arrangement involved “flagrant breaches of fiduciary duty” that “cost Groq’s stockholders billions of dollars,” the suit says. “New, innovative transactions are still governed by Delaware law. New structures must comply with the law, just like old ones. Fortunately, drawing the line is easy in this case.”
A Groq spokesperson said in a statement Monday that the deal “delivered exceptional value for Groq, our investors, and our employees.”
“This lawsuit is meritless and we…