$20 billion, all cash! Inside Nvidia’s biggest Christmas shopping spree ever to acquire Trump Jr-backed AI chip maker

In 2019, Jensen Huang’s Nvidia acquired Israeli chip designer Mellanox for just under $7 billion, making Hat its largest acquisition at the time. So far, the AI chip maker has signed a $20 billion deal to acquire the assets of AI startup Groq in an all-cash deal; This is the largest acquisition ever. CNBC report.

Under the deal, Nvidia will acquire all of Groq’s assets, except for the startup’s nascent Groq cloud business, which makes artificial intelligence accelerator chips, which will continue to operate “uninterrupted,” Nvidia said in a blog post, without providing financial details of the transaction.

Previously, Nvidia announced plans to invest up to $100 billion in OpenAI, but no official deal has been announced yet.

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What does Nvidia buy from Groq?

Groq said in its blog post that Nvidia will acquire the inference technology, for which both companies have signed a non-exclusive licensing agreement. However, the transaction value of the deal was not disclosed.

Disruptive CEO Alexis Davis, who led Groq’s last funding round in September, told CNBC that the deal went through quickly.

Under the deal, Groq founder and CEO Jonathan Ross and the company’s president, Sunny Madra, will join Nvidia along with other senior leaders to “help develop and scale licensed technology,” according to the blog post.

Nvidia is buying Groq’s assets just three months after the AI startup raised $750 million at a valuation of about $6.9 billion from investors including Blackrock, Neuberger Berman, Cisco, Samsung, Altimeter and 1789 Capital, which is partnered by Donald Trump Jr.

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Alexis Davis, who has invested nearly half a billion in Groq since its founding in 2016, told CNBC that Nvidia has acquired everything except the company’s cloud business.

“GroqCloud will continue to operate without interruption,” Groq said in its blog post.

It was also stated that even after the acquisition, Groq will continue to operate as an independent company under the CEO of chief financial officer Simon Edwards.

Why is Nvidia buying Groq?

Acquiring Groq would expand the AI chip manufacturing giant’s capabilities, according to an email CNBC obtained from Nvidia CEO Jensen Huang to company employees.

“We plan to integrate Groq’s low-latency processors into the NVIDIA AI factory architecture and extend the platform to serve a broader range of AI inference and real-time workloads,” Huang wrote in the email, according to CNBC.

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Huang also said that while Nvidia added Groq’s senior leaders to its ranks and acquired its intellectual property, it was “not acquiring Groq as a company.”

The deal comes at a time when Nvidia had $60.6 billion in cash and short-term investments as of October; this rate was approximately $13 billion in 2023. Other tech giants like Google, Meta, and Amazon have struck similar types of licensing deals over the past few years to acquire the best talent and technology from smaller AI firms.