NEWS / Technology

Nvidia Acquires AI Chip Startup Groq for $20 Billion in Major Deal

Briefs Finance

Published Dec 26, 2025

Summary:

Nvidia is purchasing assets from Groq for about $20 billion, marking its largest acquisition to date.

Nvidia's previous largest acquisition was Mellanox for nearly $7 billion in 2019.

As of October 2025, Nvidia had $60.6 billion in cash and short-term investments.

Nvidia's Significant Acquisition

Nvidia has announced it will buy assets from Groq, a startup known for its AI accelerator chips, for approximately $20 billion.

This deal is Nvidia's largest purchase ever, significantly surpassing its previous acquisition of Mellanox in 2019 for nearly $7 billion.

Details on Groq and Its Valuation

Groq was founded in 2016 by creators of Google's tensor processing unit, which is used for AI workloads.

In September 2025, Groq was valued at $6.9 billion during a financing round where it raised $750 million. Investors included Blackrock, Neuberger Berman, and Samsung.

Non-Exclusive Licensing Agreement

As part of the acquisition, Nvidia entered into a non-exclusive licensing agreement for Groq's inference technology. Groq's CEO Jonathan Ross and other senior leaders will join Nvidia to help advance this technology.

However, Groq will continue to operate as an independent company under the leadership of finance chief Simon Edwards.

Financial Position of Nvidia

As of October 2025, Nvidia's cash and short-term investments amounted to $60.6 billion, a significant increase from $13.3 billion at the start of 2023.

This financial strength has allowed Nvidia to pursue aggressive growth strategies, including this acquisition.

Implications of the Deal

Nvidia's CEO Jensen Huang stated that the acquisition will enhance the company's capabilities in AI inference and real-time workloads.

Nvidia plans to integrate Groq's low-latency processors into its AI architecture, expanding the platform's reach.

Future Prospects for Groq

Groq is targeting $500 million in revenue for the current year, driven by rising demand for AI accelerator chips.

Despite the acquisition, Groq's cloud business, GroqCloud, will continue to operate independently.

Conclusion: Nvidia's Strategic Moves

This acquisition reflects Nvidia's ongoing commitment to expanding its influence in the AI sector.

The company has been investing heavily in chip startups and technology licensing to enhance its product offerings and maintain its leadership position in the competitive AI market.

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