Name: Nvidia strikes $20B deal with Groq
Uploaded: 2025-12-26T18:57:01.154Z
Duration: 3 min 5 s
Description: CNBC’s MacKenzie Sigalos reports on the $20 billion Nvidia deal to license assets and hire executives from AI chip startup Groq.

CNBC’s MacKenzie Sigalos reports on the $20 billion Nvidia deal to license assets and hire executives from AI chip startup Groq.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

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Nvidia has struck a $20 billion licensing deal with AI chip company Groq, bringing over Groq's founder, key executives, and intellectual property. The agreement, which leaves Groq's cloud business independent, is Nvidia's largest to date and follows a strategy used by other tech giants to acquire talent and technology without triggering regulatory scrutiny.

The deal is expected to help Nvidia address supply chain bottlenecks and develop more cost-effective, power-efficient server chips for AI applications. Industry analysts suggest the move is partly defensive, aiming to prevent Groq's technology from reaching competitors like Broadcom or AMD, while also strengthening Nvidia's position in the AI chip market.

Nvidia strikes $20B deal with Groq

NVIDIA, striking a $20 billion deal to license technology from the AI chip firm GROQ, G-R-O-Q, and hire away some of its top executives. Mackenzie Sagalos has more in today's Tech Check. Mack. Hey, Brian. So NVIDIA's dominance in AI chips is so big that the next moves are about locking in what comes after GPUs. This GROQ agreement, it brings over the founder, key leaders, and the company's IP. Three months ago, GROQ raised a $6.9 billion valuation, so this is close to a 3X premium and by far NVIDIA's largest deal yet. NVIDIA's calling it a licensing agreement, not an acquisition. The cloud business stays independent, but it's the same playbook that Microsoft, Google, and Amazon have used to scoop up AI talent without triggering regulatory reviews. Now, NVIDIA, it is sitting on $60 billion in cash, up from $13 billion two years ago, so they can afford to pay up. And in fact, they've been looking for places to park that cash. So the real question is, why use it for a company that just slashed its 2025 revenue projections by 75%? And the answer comes down to chip design. GROQ's chips keep data closer to the compute on the processor itself, rather than shuttling it to separate memory chips. NVIDIA's GPUs rely heavily on high bandwidth memory, a supply chain controlled by just a handful of firms. So this deal could ease that bottleneck while helping NVIDIA design cheaper, more power-efficient server chips for running AI applications. But there's also another way to read this. Gil Loria from DA Davidson told me that this looks like an entirely defensive deal. NVIDIA wanted to make sure that technology that could challenge its lead didn't end up in the hands of Broadcom or AMD. NVIDIA controls roughly 90% of the AI chip market and faces antitrust scrutiny in the EU, UK, and China. So this lets them add capabilities while avoiding the M&A spotlight, and it eliminates one of the few credible competitors trying to chip away at its dominance in running inference workloads. Guys? Mac, that's exactly where I was going to go with you. Are there other competitors to GROQ with a cue in this marketplace? Could we see more M&A or more exotic dealmaking, if you will, in light of this? Well, we know that Intel is looking to make an acquisition on that front as it beefs up its chip program. And what's so fascinating about this deal in particular is the fact that the GROQ CEO and founder, Jonathan Ross, isn't just any founder. He helps build Google's TPU, which has become NVIDIA's most credible competition. Google stock, that's up 65% this year, and the TPU is a big part of that story and why it's been landing these major deals with Anthropic and Meta. Now the guy who designed that architecture is going to NVIDIA. Do TPUs kill GPUs? TPUs are essentially Google's alternative to GPUs, yes. And so they are cheaper to run. Google has been pretty quiet about what the price point is here, but we have seen a lot of people start to pivot to Google Cloud and because the TPU has such a good reputation out here in Silicon Valley, also on the street. All right, Mackenzie Segalos, thank you.

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Nvidia strikes $20B deal with Groq

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