By Tobias Mann
Publication Date: 2025-12-31 11:02:00
This summer, AI chip startup Groq raised $750 million at a valuation of $6.9 billion. Just three months later, Nvidia celebrated the holidays by dropping nearly three times that to license its technology and squirrel away its talent.
In the days that followed, the armchair AI gurus of the web have been speculating wildly as to how Nvidia can justify spending $20 billion to get Groq’s tech and people.
Pundits believe Nvidia knows something we don’t. Theories run the gamut from the deal signifying Nvidia intends to ditch HBM for SRAM, a play to secure additional foundry capacity from Samsung, or an attempt to quash a potential competitor. Some hold water better than others, and we certainly have a few of our own.
What we know so far
Nvidia paid $20 billion to non-exclusively license Groq’s intellectual property, which includes its language processing units (LPUs) and accompanying software libraries.
Groq’s LPUs form the foundation of its high-performance inference-as-a-service offering, which it will keep and continue to operate without interruption after the deal closes.
The arrangement is clearly engineered to avoid regulatory scrutiny. Nvidia isn’t buying Groq, it’s licensing its tech. Except… it’s totally buying Groq.
